Soft Consensus vs ‘Prove Me Wrong’

 

Everybody knows the boat is leaking, everybody knows the captain lied. Leonard Cohen

How you think determines what you see. As a Toyota acolyte, I learned to see & think in a different way. The past decade I’ve been immersed in Innovation thinking - how to create something valuable seemingly out of thin air. This is the first of a series of articles on what I’ve learned.

A human being drew this.

Decision-Making: Consensus or Prove Me Wrong?

Soft Consensus:

When it comes to Innovation (or Strategy), avoid ‘soft consensus’. Here’s a common scenario: Our path forward is unclear. We have conflicting data or no data at all. So, let’s go around the Board room or team room & try to reach a consensus. Let’s give everyone a chance to speak & weigh up what we think it all means. Everyone’s voice gets equal weight, regardless of how much expertise or skin in the game they might have.  People who are most emotional get extra points. Sometimes this devolves further into HIPPO or ZEBRA or WOLF management.^[1]

Everybody pretends things are ‘just great’, and such sessions often end with heartfelt paeans to engagement & inclusiveness.  But to quote Leonard Cohen, ‘Everybody knows the ship is rotten. Everybody knows the captain lied.’

This is a great way to kill Innovation & destroy Value. We thereby institutionalize Confirmation Bias - the Lord Voldemort of bad thinking. New offerings sink like stones & good riddance.  Toyota acolytes are familiar with that great company’s deep understanding of Waste. Is anything more wasteful than designing & releasing an offering nobody wants?

Prove Me Wrong

If you want to innovate, encourage dissent & disagreement. Encourage those who disagree to explain their thinking. Prove me wrong conveys great benefits. For a start, it encourages people to challenge the weakest elements of your hypothesis. It compels the Innovation team to validate their ideas with data. Prove me wrong reinforces the fact that Innovation entails experimenting your way to Value, in the dark.  Rarely do we have a deep understanding of the key questions:

●      Who is the customer?

●      What does the customer value?

●      Why do they buy or not buy?

Pretending otherwise, is preparing to fail. Only through quick, smart & binary experiments can we begin to understand the problem we’re trying to solve. ‘Quick, smart & binary’ are antithetical to ‘soft consensus’, which is commonly slow, thick & data-poor.

Innovation thrives on the margins, with the oddballs, eccentrics & iconoclasts. The ones that challenge that status quo, the ornery & quirky.  Soft consensus, by contrast, cuts off the so-called ‘long tails’ of the distribution, and with them, the interesting, eccentric & profound.

Last Word

Prove me wrong is perhaps the most challenging Innovation mental model. Companies that seek to emulate Toyota rightfully emphasize ‘Respect for People’. Prove me wrong is easily mistaken for disrespect. Mature leaders will understand that the opposite is true. Another common mistake is giving a platform to ‘Grumblers’.  [Please refer to my earlier series on Fukuda’s Parable.] Grumblers and iconoclasts are not the same thing. The former are cynical & disengaged and we must ignore them. The latter are passionate, may be angry or frustrated, but are fully engaged. Listen to them.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

 

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[1] Highest Paid Person’s Opinion, Zero Expertise But Really Arrogant, Works on the Latest Fire

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

 

Ambidexterity – the Leadership Challenge (part 1)

Ambidexterity is Job One. Sustained prosperity in the 21^st century entails navigating in to very different worlds, first articulated by Aristotle. Senior leaders & the Board need to learn & practice two different mindsets and ways of working.

Why build something nobody wants?  Steve Blank

Ambidexterity entails the ability to both:

•  Protect the core business with the proven methods of OpEx/Lean, and
•    Ignite new Growth using the Digital methods of the world’s innovation hot spots 

2.     I’ve spent much of the past decade helping senior leaders & Board members navigate these two worlds.  I’ve described transformation blockers in detail in earlier blogs. In this series, I’ll discuss some of the challenges leaders face.

 Achievement in the World of Operations Can Be a Blocker

 Most senior leaders come from areas like Operations, Finance, Engineering or Technology. This is Plato’s World of Necessity – a world that follows natural laws, accepted standards, and codes of practice. This is the world of physics and chemistry, mathematics, the Toyota Production System, and Generally Accepted Accounting Principles.

 In this world, things cannot be ‘other than they are.’ For example, the energy in a Carbon - Carbon bond is 348 kJ/mol, whether you’re in Seoul or San Francisco. If you mix a polar salt like sodium chloride with a polar solvent like water, the salt will dissolve into its constituent ions (Na+ and Cl-). It happens every time, whether you’re in Tokyo or Toronto. I like the World of Necessity. I was trained as a chemical engineer & cut me teeth of factories around the world. I like natural laws – you can depend on them.

The past decade I’ve learned to work in the world of disruptive Innovation – Plato’s World on Contingency. This is the world of culture, opinion, style, fashion, politics and the like. It’s a place where things ‘can be other than they are’.  People say one thing - and do the opposite! Customers assure you they love your new offering and then stay away in droves.  You have a great market, and then it disappears for no discernable reason. You build the ‘better mousetrap’, and nobody cares. Though they’ll tell you they love it and will definitely buy it!  Different rules apply here.

And so, what you learn in the World of Necessity is often a blocker in the World of Contingency.  Here we face ‘complex’ problems for which there is no accepted approach, standard or code of practice. There are so many unknowns (both ‘known’ and ‘unknown’) that we have to 'Probe-Sense-Respond' our way to a remedy. In other words, remedies emerge through continuous experimentation, and a happy alchemy of data & intuition.

Imagine you’re a senior leader in a major Manufacturing, Aerospace, Healthcare, Construction or Financial Services company. You’ve grown up in the world of science, mathematics, standards and codes of practice.  Your company is rightly proud of its zero defect, high reliability, root cause problem solving culture, and of its mastery of complex technology.

Will you be comfortable in a world where 90% of your experiments fail?  All your instincts rebel against the idea, no? The difference in approach between Taiichi Ohno (father of the Toyota Production System) & Jony Ive (Steve Jobs’ Chief Design Officer) is immense. Leaders nowadays must understand both & be able to fluidly switch gears based on where they find themselves.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

The Two-Gear Economy, part 1 – Canada’s Innovation Predicament

Pascal Dennis, co-author of Harnessing Digital Disruption

It’s no longer enough to protect your core business with the proven methods of Operational Excellence - you also have to ignite new growth using the methods & mindset of the world’s Innovation hot spots. The ambidextrous will prosper in our brave new world.

What applies to companies, also applies to economies, no? Canada, my dear land, is in the midst of a historic decline. Among peer countries, Canada has been last in productivity growth for the past ten years and is projected to be last in the coming decades. Canada’s most prosperous provinces, Alberta & Ontario, are poorer than the USA’s poorest states. You read that right. Canada’s GDP per capita, a decade ago roughly equal to America’s, is now about 60% of America’s. To make things worse, Canada’s real estate is roughly twice as expensive as America’s. So, life is hard in Canada, and likely to get harder.

So, what’s a country like Canada to do?

What applies to companies, also applies to economies…And so, Canada must take steps to a) protect its core business, and b) ignite new growth.

Protect the Core

Canada’s core business is the physical economy including manufacturing, mining, oil & natural gas, agriculture, as well as financial services (including banking, insurance, leasing and real estate). Protecting the core business means developing a fair & competitive tax & regulatory system - one that attracts investment, and is appealing to talented people including entrepreneurs, small business owners and skilled professionals.

Investment & talent have fled from Canada the past few decades. My friend, Paul, a gifted Tech entrepreneur and graduate of Waterloo’s world class engineering program is a case in point. Paul is a senior leader in one of Silicon Valley’s most celebrated AI unicorns. ‘I left Canada as soon as I graduated,’ he told me. ‘I’d be crazy to stay. There’s nothing for me there.’

Free trade has greatly benefited Canada’s core industries, but is now in imminent danger thanks to Mr. Trump’s international trade war. Canada must do all it can to sustain free trade with all international partners, but it won’t be enough to slow the erosion in prosperity and wellbeing.

Ignite New Growth

Igniting new growth entails designing cool products & services everybody loves and is willing to pay a premium for. Design, data and digital methods are at the heart of Innovation.

Fair & Competitive Tax & Regulatory System

If you want to Protect the Core - and Ignite New Growth, you have to have fair taxes & regulations. Otherwise, people like Paul will continue to leave in droves. Why build anything when more than half will be clawed back by the government? Why not go across the border to Silicon Valley, where you’ll earn - and keep - much more of the value you’ve created?

National Innovation Infrastructure

But fair taxes & regulations are not enough. You also have to make it easy for smart people to connect & try stuff together. And that means fostering a national Innovation infrastructure. Singapore provides an excellent blueprint. I started going there in 2018, working with Laurent in FinTech & Consumer Goods. I met splendid people and explored the great city’s innovation labs, maker spaces and accelerators. I loved attending Friday ‘playbacks’ during which innovation teams would summarize the week’s activities - wins, losses, what they learned & what it means for next week & beyond. I loved attending the Singapore FinTech Festival (SFF), SNG Tech Week, and all the rest.

During SFF week, I’d meet people from startups offering a broad range of services in payment, lending, wealth management and insurance. I met engaging entrepreneurs from all over the world, whose minds seemed to operate at the speed of light. Laurent & I wrote a book about our Singapore adventures, trying to capture that energy, excitement, exotic neighbourhoods & marvelous cuisine.

I’ll talk about Singapore’s innovation infrastructure in an upcoming piece. For now, I’ll leave you with how I felt at the Fusionopolis innovation hub - three buildings full of innovation labs, maker spaces, and accelerators. Imagine open spaces, interesting visuals, a small stage in the center, the atmosphere electric, as in a great jazz club. Something like model launches at our old Toyota factory, but with quicker experiments & somewhat different methods & mindsets. And me thinking, ‘This is the place to be.’

Sure enough, Singapore, like Silicon Valley, is full of talented Canadians. Next time, how did Singapore become an innovation powerhouse, and what’s mean for countries like Canada?


Best wishes,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS To learn more about my Strategy Execution program, Getting the Right Things Done in a Digital World, feel free to drop me a line.




In case you missed our last few blogs... please feel free to have another look…

Has OpEx/Lean Gone Wrong?
If It’s Not Simple, It's…
Igniting New Growth – Aristotle’s Two Worlds, Part 2
Igniting New Growth – Aristotle’s Two Worlds