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

Protect the Core & Ignite New Growth – Ambidexterity in Practice

The ambidextrous will prosper.

Pascal Dennis, co-author of Harnessing Digital Disruption

I’ve walked two pathways in my career– OpEx/Lean, and the way of Smart Growth (applied Innovation).  Integrating them is my aspiration these past ten years. So, what does such ambidexterity look like in practice?

Some years ago, I wrote a book about planning & execution called Getting the Right Things Done.  GRTD is about protecting your core business by focusing & aligning on a clear aspiration & winning logic. Our winning strategy is typically expressed in terms of core pillars, such as People, Quality, Delivery and Cost. Each pillar’s story is told on one-page A3-sized storyboards.  Each pillar’s A3 storyboard in turn comprises a clear aspiration & winning logic.

Simplicity is a key organizing principle in GRTD – if we cannot tell a clear simple story on one page, we probably do not understand the problem. The cost of complexity is extremely high – doing nothing is often less wasteful than pressing random buttons on the hope something will work.

Love the problem is a second core principle – develop a profound understanding of what we are trying to achieve before attempting countermeasures.  Given our impatient human nature, this is very hard to do.  (‘Don’t just stand there – do something!)  Plan & execute in accord with the scientific method a third core idea. In other words, our winning logic is a hypothesis, which we must test & validate based on data.

Protecting your core business in this way provides the foundation for Smart Growth. For a start, you free up plenty of cash which you can invest in your innovation portfolio. Moreover, the core principles of Protecting the Core are aligned with those of Smart Growth.  If you’ve been practicing kaizen, Growth Hacking (‘Lean experimentation’) will not be entirely foreign. If you’ve learned the physics of Flow in a great Lean company, you can readily apply them in an innovation sprint.

Igniting new Growth entails developing a balanced portfolio of innovation projects that a) align with your overall Aspiration & Winning Logic, and b) are mutually supportive. In other words, by doing project A & B, you are better able to tackle the more challenging C. Balanced means the right combination of better journeys, new journeys & offerings, and new businesses.

Your organization’s ‘mother Obeya’ (Control Tower, Cockpit, Big Room) with look just a little different.  In addition to the Pillar report outs and visuals, you’ll have a section showing the status of your Innovation Portfolio.  The visual system we use most often is a funnel with swim lanes corresponding to the type of innovation. We’ve also had success with race tracks and regatta courses.

Your funnel has to reflect the progress of each innovation (often called a ‘proof of concept’ – POC) toward validating the key tests:

1.     Does it Wow? (Desirability)

2.     Can we make money? (Viability)

3.     Does it work? (Feasibility)

But that’s a topic for another day. If you’re impatient, you can read about it here.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

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

AI and Innovation, part 2
AI Without Acumen = Garbage at the Speed of Light
Smart Growth (continued) - the Hacker
Smart Growth - the Huslter