The Difference Between Protecting Your Core Business & Igniting New Growth

Pascal Dennis, co-author of Harnessing Digital Disruption

The future belongs to the ambidextrous – those who can both protect the core business with OpEx/Lean AND ignite new growth using the magic of Silicon Valley & Singapore. Our biggest challenge is understanding the very different mindset behind OpEx/Lean & Innovation. Our biggest challenge: OpEx/Lean and Innovation live in very different worlds first articulated by Aristotle 2,500 years ago.

OpEx/Lean Lives in the World of Necessity

This is the world of things that cannot be other than they are. Think Physics, Chemistry and Math; think PDCA, process management, and the Theory of Constraints. The Pareto principle – 80% of the problem is caused by 20% of the causes – is a cornerstone of this world. I absorbed this iron principle as a young Toyota manager. Up until then, like all young managers, I was prone to ‘blah blah blah’. Today I’m lucky enough to advise Boards & C-suites and guess what? The Pareto principle remains fundamental in Board decision-making.

Innovation Lives in the World of Contingency

This is the world of things than can be other than they are. Think fashion, taste, public opinion and culture. Igniting new Growth entails answering questions like:

• Who is the customer?
• What does the customer value?
• Why do they buy, or not buy, from us?

After a few Innovation sprints I realized I was ‘no longer in Kansas’. The principles of OpEx/Lean I’d worked so hard to internalize could be helpful, but were not sufficient, by a long shot! Sometimes they applied – and sometimes not! For example, customers would confidently tell us what they valued – and then ignore it when presented with our offering. And then they’d change their mind again.

Standards & analysis were helpful, for example, in the clever crafting of Discovery interview scripts (‘What hypothesis are we testing?’), and astute qualitative & quantitative analysis. But intuition and gut feel played a far bigger role than in the world of Necessity.

Pareto charts often went out the door. We would identify what we believed were the key Satisfiers and build a kick-ass offering. And then realize our approach was a dead-end because our competitors had done exactly the same as we had done.

Igniting new Growth means finding the proverbial ‘Blue Ocean’ – the place where nobody else if fishing. My Innovation mentor & co-author, Laurent Simon, taught me the magic of Discovery & Validation Interviews through which, with practice, I learned to uncover the hidden pains & needs that might truly delight the customer. These are often so obscure that not even the customer knows them!

For example, one of our projects entailed creating value in the Wealth Management division of a major bank in east Asia. Our Discovery & Validation interviews uncovered a profound, yet unspoken need of customers – anxiety about their elderly parents. We turned it into a kick-ass offering that opened up our ‘Blue Ocean’.

And this is why ambidexterity is such a challenge: Board & C-suite members have to recognize Aristotle’s two worlds and apply the methods & mental models that suit the situation. It took me a decade to understand how to protect the core business with OpEx/Lean. It has taken me another decade to understand the topsy-turvy world of Contingency and Innovation.

It’s worth it for the organization and the individual. In the age of AI, leadership, flexibility and creativity will be the key to sustained prosperity. Understanding how to navigate the worlds of Necessity and Contingency, and how to engage a high performing team (of both human & AI agents) will be a superpower.

Best wishes,

Pascal Dennis

E: pascal.dennis@leansystems.org




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

The Control Tower – Learning to See What Is
The Hardest Thing - Seeing What Is
Fundamentals of OpEx/Lean, Part 2
Fundamentals of OpEx/Lean, Part 1

Fundamentals of OpEx/Lean, Part 2

Pascal Dennis, co-author of Harnessing Digital Disruption

The Four Levels of Visual Management, Part 2

Last time I talked about making problems visible through the four levels of visual management. I described Levels 1 and 2, which have comparatively low power. Today, our topic is Visual Management, Levels 3 and 4:

Level 3 – Organizes Behavior

Home positions for tools & equipment are a good example. In a surgery, home positions provide a nice visual confirmation that sponges, scalpels and other equipment are back where they belong – and not inside the patient!

In manufacturing, having a home position for, say, our torque wrench and gauges, ensures a) they’re there when we need them, and, as important, b) we know when they’re not there. “Right, Bonnie is doing her daily 2:00 pm torque audit.”

Other good examples include the ribbed perimeters, and studded lane lines on highways. You know at once if you’re on the median or straddling your lane. You quickly correct your behavior.

Recently, I saw a nice kaizen in the Oncology department of a children’s hospital. Infections are a major risk in such wards. How to encourage staff & parents to decontaminate their hands before they enter the room? Move the hand decontamination unit to the point of entry. You can’t enter Oncology without seeing and using the unit. As a result, hand hygiene compliance rates have spiked.

Effective Agile teams implement the Agile ‘ceremonies’ each week including the Monday morning planning meeting, Daily Stand-up, and Friday review of the week’s work. Such process discipline reinforces purpose, highlights abnormalities, and organizes countermeasures while reducing hassle.

Level 4 – The Defect is Impossible

OpEx/Lean practitioners will recognize the ‘poka-yoke’ concept. We develop such a deep grasp of our process and its possible failure modes, that we install gizmos and practices that make them impossible.

Manufacturing is full of these: alarms on torque wrenches, electronic lights and safety mats that disable the machine if a team member enters the line of fire, gasoline nozzles that won’t fit diesel tanks and so on.

A good website payment process makes it impossible to proceed to the next screen unless you have entered the needed information correctly. In Health Care, a poka-yoke on gas lines make it impossible to mis-connect oxygen and other gas lines.

As we get better at OpEx/Lean, our visual management naturally progresses from Level 1 to Level 4. Once we’re good at Level 1 and 2 visual management, we begin to think. “The same defect – here we go again! How do we prevent it?”

Who is the best source of Level 3 and 4 visual management? Front-line team members, of course, which is why Total Involvement is a leader’s priority. Alienate the front line and you lose all their insight & creativity. Problems mushroom – but you already know that.

OpEx/Lean fundamentals like visual management are also the cornerstone of Innovation. By protecting your core business with OpEx/Lean, you lay the foundation for Igniting New Growth with Digital methods.

Best regards,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS: To learn more about my executive mentoring programs: Exec 101 - Protecting the Core Business, and Exec 201 – Igniting New Growth, feel free to drop me an e-mail.



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

Fundamentals of OpEx/Lean, Part 1
Canada's Innovation Makeover: Singapore’s Cheat Sheet
The Two-Gear Economy, part 2 - Singapore’s Innovation Ecosystem
The Two-Gear Economy, part 1 – Canada’s Innovation Predicament

Fundamentals of OpEx/Lean, Part 1

Pascal Dennis, co-author of Harnessing Digital Disruption

The Four Levels of Visual Management, Part 1

You can’t fix what you can’t see. This applies whether you’re trying to protect your core business or ignite new Growth using Digital methods. Excellence entails making problems visible. The added benefit: visual management frees up ‘white space’ in your brain. You feel lighter, fresher & more creative.

Here are the four levels of Visual Management, in order of increasing power:

Level 1 – Tells only

STOP signs are a good example of Level 1 Visual Management. In our neighbourhood, people blow through STOP signs all the time. In fact, we call them ‘Hollywood stops’ – the driver slows by 5 miles per hour, takes a perfunctory look around & drives on through. Not exactly, Safety First.

A Digital equivalent might be a chart in a virtual ‘Control Tower’ (aka Obeya), say on Miro or Mural, that everybody ignores. Or an Agile team’s kanban board with WIP levels far exceeding defined standards but is likewise ignored.

Level 2 – Something changes, which gets your attention

Traffic lights are a good example. “Hey, the light’s changed to Green. We can drive on.”

Level 2 has more power because, done well, it wakes people up. A Digital equivalent might be a chart in a Control Tower that includes a target line, a Red/Green indicator, and a sticky note below it explaining what’s going on. And a Leader operating rhythm (standardized process) wherein we review our key indicators on a regular basis and act on significant abnormalities.

My regular readers may recall that OpEx/Lean is about wakefulness…. “Wake up everybody! We have a problem...”

Sadly, visual management in many organizations gets stuck at Level 1. Have you ever been in a hospital full of signage exhorting staff with some slogan? “Patient Safety is everybody’s responsibility!”

As W. Edward Deming observed a generation ago, such exhortations amount to blaming the worker. They subtly shift responsibility from senior management to front line workers. “Hey, don’t blame me. I told them not to do it…”

A few years back, my mom had major surgery at a local hospital. The medical staff was dedicated and capable, as usual, but was the management system making their lives easier? For example, was there visual management around infection control, or mis-medication - methods that highlighted abnormalities and triggered countermeasures?

At a deeper level, did senior leaders foster a culture of transparency, psychological safety and involvement? Did team members feel able to highlight – and fix – abnormalities? Were they trained in root cause problem solving?

No, just exhortations: Do something! It’s up to you!

My mom suffered not one, but two infections. And when I wrote to the VP of Patient Safety & Experience, I received an astonishing response. My mom was to blame, not the hospital. Evidently, in the VP’s mind patients and the front-line staff were responsible for safety. (I don’t want to be misunderstood. I’ve been privileged to work with many splendid hospitals.)

Deming taught us that the root cause of the problem is almost always in the system – which senior management owns. Senior leaders cannot take the authority, rewards and perquisites of power – and not accept the responsibility.

Next time, I’ll talk about Level 3 and 4 visual management.

Best regards,

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…

Canada's Innovation Makeover: Singapore’s Cheat Sheet
The Two-Gear Economy, part 2 - Singapore’s Innovation Ecosystem
The Two-Gear Economy, part 1 – Canada’s Innovation Predicament
Has OpEx/Lean Gone Wrong?

Getting the Right Things Done in a Digital World

Pascal Dennis, co-author of (Harnessing Digital Disruption)

My career has been a happy & lucky journey of discovery. In the early 1990s, I was a young chemical engineer & aspiring manager absorbed with the management gurus of the 20th century. In the West, Deming, Juran, Peter Drucker; in the East, Shingo, Ohno, Kano and the rest. I believed that if I could absorb this ‘system of profound knowledge’ (Deming’s phrase), I’d have a gift for life: the ability to create Value in any endeavour. When I joined Toyota, in my mind, the world’s greatest university, my learning accelerated. I felt like a kid in a martial arts movie.

By the early 2000s, I felt confident enough to start an advisory business with like-minded people. We began in manufacturing, our home industry. With time we migrated into aerospace, consumer goods, financial services, Health Care…, in each case translating the profound methods we’d learned.

We worked with fine people & companies and got to explore our miraculous world. But about ten years ago, something began to nag at me. I sensed a complacency in myself & my community. Did we really have all the answers? Was OpEx/Lean really the key to the kingdom?

If so, why was everybody talking about Tech startups and places like Silicon Valley & Singapore. Why were companies like Google, Amazon, Facebook, Apple (GAFA), and Baidu, Alibaba, Tencent and Xiaomi (BATX) so valuable, and so famous? Their business valuations exceeded those of the great industrial companies. Toyota, Honeywell, P & G etc. were still great, but something fundamental had changed.

I began to explore the innovation hot spots and the start-up scene. I became acquainted with the work of people like Clay Christensen, Steve Blank, and Alex Osterwalder. I began to develop a basic grasp of Design Thinking, Agile, Lean Experimentation (aka Lean Startup), and Growth Hacking. I quickly realized that these methods share core principles with OpEx/Lean. But Innovation methods & mindsets had evolved in a different direction, because the job to be done was different. Innovation methods were aimed at creating something new - new customer journeys, offerings, and even new business models. The job to be done of OpEx/Lean, by contrast, is to protect the existing company.

And then, one morning in late 2016, I got an extraordinary call from a French banker and innovator named Laurent Simon, who was waiting out a delay in a Moroccan airport. "I like your books,” he said. “Shall we write one together?"

We quickly realized we were simpatico and agreed to work together. I would teach Laurent what I knew, and Laurent would teach me what he knew. And so began the second great learning journey of my charmed career. 

Laurent lived in hot humid Singapore, and I in cold, windy Toronto. Our first meeting was in Pietermaritzburg, South Africa, and that’s where we had our first of many long ‘walk & talks’, which we’ve sustained since then.

I began to visit Singapore regularly and to participate in Innovations sprints led by Laurent. It was a steep learning curve, but it was fun. INSEAD business school has a Singapore campus, which became our home base. In fact, I enrolled and became an INSEAD alumnus.

Singapore’s iconic Marina Bay Sands Hotel – the roof top bar figures prominently in our book!

With time, we built a body of knowledge, and practice. Then we published a book called Harnessing Digital Disruption, a business novel whose setting is a major international bank. ‘HDD’ crystallizes our body of knowledge. 

Here is a summary of what I have learned, and what I believe it means for OpEx/Lean and Innovation professionals, and for progressive organizations around the world. In the months to come, I’ll delve into each of these in detail: 

1. It's no longer enough to Protect the Core business with OpEx/Lean methods, you must also ignite new growth using Digital methods. Prosperity and growth, therefore, will go to the ambidextrous. 
2. Ambidexterity means operating in two very different worlds - worlds that were first described 2400 years ago by Aristotle. Methods & mindsets learned in one world, may not apply in the other. 
3. OpEx/Lean lay the foundation for Igniting new Growth – but is not sufficient. 
4. Innovation begins not with technology, but with the customer. Thus, Harnessing Digital Disruption begins & ends with the CEO and his most important customer, looking out on the Andaman Sea. 
5. Innovation entails the ability to create a) better Customer Journeys, b) new Customer Journeys, and c) new offerings & even new businesses. Laurent Simon and I have developed the corresponding concept of the ‘Innovation Tree’. 
6. The 'front of the house' (i.e. Design, Marketing, Sales) & 'back of the house' (Production, Supply Chain, Distribution) do not understand each other. Result: a Bermuda Triangle of waste. 
7. Protecting the Core and Igniting New Growth are both difficult, but the former is harder and is usually the constraint.
   

What does it mean for business Leaders and for OpEx and Innovation professionals? 

Mastering OpEx/Lean fundamentals is not enough. We must also understand the methods & mindset that underlie new Growth. When confronting a business challenge, leaders must ask: Am I in the world of Protecting the Core, or the world of Igniting new Growth? What methods & mindset apply here? How do I best support and motivate this team? 

The future belongs to the ambidextrous.

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…

Igniting New Growth - My Improbable Journey, Part 2
Igniting New Growth - My Improbable Journey, Part 1
Year-End: Why Is Reflection So Difficult?
What is a Good Life?

Igniting New Growth - My Improbable Journey, Part 2

Pascal Dennis, co-author of (Harnessing Digital Disruption)

Last time, I described how my improbable journey to Igniting New Growth using ‘Digital’ methods began. I was an engineer and Lean/OpEx acolyte and had spent decades learning & applying the powerful methodologies and mindset of the Toyota Production System (aka ‘Lean’). Then, through my colleague, Laurent Simon, I began to experience the world of ‘Fintech’ and Financial Services Innovation. I attended international conferences in innovation hot spots. I absorbed the work of Steve Blank, Alex Osterwalder, Ash Maurya and Clayton Christensen.

During frequent visits to Singapore, I observed and participated in Digital innovation sprints led by Laurent and team. I made friends with people like Paul Cobban, Chief Transformation Office (retired) of DBS, repeat winner of the ‘Best Digital Bank in the World’ award. I came to realize that ‘Digital’ was as profound as the Lean/OpEx revolution led by Taiichi Ohno, W. Edwards Deming, Shigeo Shingo and Peter Drucker.

Lean/OpEx is necessary, but not sufficient. We also must ignite new growth using Digital methods. Laurent was right. At the same time, I realized that I had a great deal to teach my colleagues in the world’s innovation hot spots. Young innovators have large gaps in their knowledge – (how could it be otherwise?) Things that I took for granted were opaque to them. And so began a journey of shared learning that has inspired me these past eight years.

Singapore, Bugis, the Arab quarter and Sultan Mosque, one of my favorite neighbourhoods.

Igniting new growth entails understanding the customer better than they understand themselves. I know that sounds like a ‘line’, but I have experienced it, and it is true. Igniting new growth entails defining the customer’s journey, needs, wants and jobs-to-be-done through rapid experimentation. And then defining countermeasures, including ‘exponential technologies’, to those needs, wants and jobs to be done – again through rapid experimentation. Each iteration entails the ‘Double-Diamond’ of Design Thinking, surely one of the great paradigms of our age, and recurring cycles of Discover & Validate, Discover & Validate.

Igniting new growth often, but not always, means partnering with technology companies, and developing digital platforms to complement traditional value stream businesses. Igniting new growth often entails digitizing existing Customer Journeys, developing new digital offerings, and new digital ventures.

And here’s the proviso: igniting new growth requires a solid foundation of Lean/OpEx. This insight really landed for me thanks to a senior RPA¹ executive whose firm we had engaged to digitize critical elements of a client bank’s ‘Know Your Customer’ (KYC) process.

‘If you bring us garbage processes,’ the RPA exec told me, ‘you’ll get garbage at the speed of light.’

You cannot sustain Growth unless you have a stable foundation. Andy Grove, Intel’s legendary CEO, called it ‘High Performance Management’, whose principles he expressed in his classic book of the same title. High Performance Management mirrors Lean/OpEx.

My practice these past eight years has comprised mentoring senior leaders through the following programs:

• Exec 101 – Protect your core business
• Exec 201 – Ignite new Growth

I’ve experienced the ‘hockey stick curve’ with Innovation teams around the world - there’s nothing like it. It’s as exciting as launching a major new car model.

Our challenge is a) to fully absorb and inhabit the world of Digital transformation, and b) to help anchor this marvelous world in the eternal verities of Lean/OpEx.

It’s helpful, but not essential, to have a Digital Sherpa. I supplemented Laurent’s teaching by doing robotics projects with my teenage son, Matthew. It was a challenge – the languages I’d learned as a young engineer were now antiques.

Laurent & Pascal at a hockey game in Toronto

Participating in Digital innovation sprints led by Laurent has been invaluable. I thereby absorbed the core methodologies including Design Thinking, Lean Startup, Agile ways of working, and Growth Hacking. I also began to understand the nature of digital transformation in major international organizations. The chessboard became clear, as did its players, laws and core stratagems.

And so did our overall approach to Digital Transformation, which now comprises three ‘Swimlanes’:

• Digital Strategy & Executive Coaching,
• Capability building through the Pragmatic Intrapreneur Network, and
• ‘Hot house’ innovation projects aligned with Aspiration

Laurent and I decided to express our ideas in a business novel, a format I’d had success in the past. People love good stories, especially if they’re based on lived experience. We’d both lived through intense transformations – why not write about what we’d seen and felt?

We chose a glamorous location and industry – Singapore and the heady world of international finance. The story would be a no-holds barred account of real people in a real company in trouble. We wanted to illustrate the situations, characters, and blockers you’ll likely face as you progress through your own journey of discovery and transformation. The book is also love letter to Singapore, and the settings include our favorite watering holes, neighbourhoods and hangouts. In fact, the Appendix includes a map and links to all our favorite places.

Fittingly, we released Harnessing Digital Disruption – How Organizations with Design Thinking, Agile and Lean Startup during the COVID-19 pandemic, which shed a bright light on our core themes. How do we create better customer journeys, new digital offerings and ventures, while protecting our core business?

What new skills and ways of thinking must we develop to remain relevant in a volatile, uncertain, complex and ambiguous world?

What battles must we win on the path to revival and prosperity for all stakeholders?

What kind of leadership will be required?

I’m considering launching a Newsletter to answer such questions & to tell stories about what I’ve seen & learned. Is that something you all would be interested in reading?

Best wishes,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS Drop me an email to learn more about my executive mentoring programs:

• Exec 101 - Protecting the Core Business, and
• Exec 201 – Infighting New Growth

^{1. Robotic Process Automation, also known as software robotics, uses intelligent automation technologies to perform repetitive office tasks of human workers, such as extracting data, filling in forms, moving files and more.↩}



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

Igniting New Growth - My Improbable Journey, Part 1
Year-End: Why Is Reflection So Difficult?
What is a Good Life?
All Systems Must Support Humanity – Including Lean

The Role of Senior Leaders (Part 1)

By Pascal Dennis

Hi folks, recently I spoke with Brad Jeavons and the fine Enterprise Excellence podcast.

Topic: Getting the Right Things Done in a Digital World: The Role of Senior Leaders (Part 1).

Hope you enjoy it!

2 minute tip:

Best regards,

Pascal



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

Can Lean & Agile Help to Fix Our Courts? Part 2
Ambidexterity - How to Get Started
Can Lean & Agile Help to Fix Our Courts? Part 1
Key Differences Between Protecting the Core & Igniting New Growth

Ambidexterity - How to Get Started

By Pascal Dennis

Hi folks, recently I spoke with Brad Jeavons and the fine Enterprise Excellence podcast.

Topic: Getting the Right Things Done in a Digital World: Ambidexterity - How to Get Started with Pascal Dennis.

Hope you enjoy it!

2 minute tip:

Best regards,

Pascal



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

Can Lean & Agile Help to Fix Our Courts? Part 1
Key Differences Between Protecting the Core & Igniting New Growth
Why is Business Transformation so Hard? Lessons from the ‘Back Pain Industry’
Ambidexterity Requires Navigating Aristotle's Two Worlds

Key Differences Between Protecting the Core & Igniting New Growth

By Pascal Dennis

Hi folks, recently I spoke with Brad Jeavons and the fine Enterprise Excellence podcast.

Topic: Getting the Right Things Done in a Digital World: Key Differences Between Protecting the Core and Igniting New Growth with Pascal Dennis.

Hope you enjoy it!

2 minute tip:

Best regards,

Pascal



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

Why is Business Transformation so Hard? Lessons from the ‘Back Pain Industry’
Ambidexterity Requires Navigating Aristotle's Two Worlds
What Makes Toxic Cultures?
Why Becoming an Ambidextrous Organization is so Challenging