The Trouble with OKRs – part 2

 

Does the OKR approach to strategy deployment reflect the 'top-down' mentality of Big Tech? Does OKR reflect the debilitating phenomenon called ‘Software Brain’, and its core premise - Life is just a series of loops & databases…?

Strategy is a Messy Human Thing

As with many fallacies, ‘Software Brain’ contains a significant element of truth. Life is indeed a ‘series of loops & databases’. Study & understand these loops & databased and you acquire a superpower, which used wisely can greatly reduce human suffering.  But life is much more than this.

But if you try to flatten life in this way you may end up becoming hated, no? Life also comprises messy, unpredictable, thorny, comical things like human beings, their memories, emotions, ideas & intuitions; their dreams, aspirations, religious beliefs and shared conscious & unconscious minds; the cycles & rhythms of nature including human nature, animals & the forces of physics, chemistry, biology, the pure ideas of philosophy and mathematics.

Aristotle described the two Worlds of Necessity and Contingency. Software brain seeks to flatten the world to match algorithms, loops and databases, which is a paltry & incomplete reflection of one of Aristotle’s worlds. Does OKR do the same?

The Essence of Strategy Deployment & Execution

Strategy deployment entails engaging the genius of the organization.  The Leader’s most important job is developing a questioning culture, one in which healthy push-back is encouraged.  “Here’s our Aspiration & Winning Logic.  What do you think? Help us understand what we’re missing; give us fresh perspectives and your ideas on how to get better.”

To be sure, I’ve encountered OKR companies with questioning cultures wherein healthy dissent in encouraged, but they’re a minority.  More common is the superficial, unimaginative Aspiration & Winning Logic, mechanically pushed down with little reflection, testing or validation. People tune out – (‘Here’s one more dumb thing I have to do…’). Do they sense that their humanity is being flattened into loops and databases?

The W-V model attributed to the great Shoji Shiba is a fine example of a healthy Strategy Deployment system. Hypotheses continually bounce back and forth between management levels.  “Here’s what we think? Are we on the right track? If so, please translate our shared thinking into tactics for your team, department or site.”

Most importantly, this back & forth between and among management levels continues into & throughout the strategy execution cycle.

Key Attributes of World Class Strategy Systems

When I’m asked by a Board or Senior Team to ‘assess our strategy & management system’, a key step is to walk the value stream backwards, starting with the customer, and moving upstream one step at a time till you get to raw material suppliers. A parallel step entails walking the customer journey backstream, starting with the top of the proverbial funnel.

In my value stream walks, I ask questions like:

·       Are problems visible (even to an outsider like me)?

·       What do people talk about in their huddles (from senior leaders to the front-line)?

·       What’s the organization’s attitude to problems? Are problems hidden, a sign of failure? Or are they, to quote W. Edwards Deming, ‘the process speaking to us’?

·       Do teams have a standard approach to problem solving?

·       How good is the data? Is it complete, end to end, and of high quality?

·       Does the team develop ‘Your Own Data’ (YODA) as required? Or do they passively wait for corporate data?

These are all messy questions that engage both hemispheres of the brain and both of Aristotle’s worlds. Does your OKR process foster a healthy, pushback culture that can sustain & engage? Or does it flatten corporate life?

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

 

Strategy is Doing – Making Strategy Fun Again (Part 5)

 

Is Strategy the domain of the specialist, consultant and technocrat? Are general managers primarily receptors and vehicles of execution?  That seems to be the case in many organizations wherein highly trained & credentialed experts develop objectives and key results and hand them down to general managers to ‘execute’. Indeed, the last step in the corporate strategy flowchart is often ‘Execute’ – which I call ‘And Now Miracles Will Happen’.

The downsides are palpable:

·       Strategies tend to be shallow, brittle, and impractical.

·       Reflection & Action are disconnected; the PDCA cycle is shattered.

·       We lose the invaluable practical learning, and tacti knowledge which Aristotle called ‘Phronesis.’

·       General managers fail to deepen their strategy & problem-solving skills.

·       Front line morale suffers. (“Why are they asking us to do dumb things?”)

This is a core weaknesses of the popular OKR process, which often resembles1950’s style Management by Objectives.

Strategy is the Continual Interplay Between Reflection and Action

In fact, Strategy is the domain of the practitioner, line leader, and general manager. Highfalutin degrees are not a prerequisite and can be a liability. Strategy entails Phronesis, an ancient Greek concept which has been defined as ‘practical wisdom’, ‘prudence’, or ‘common sense’. Aristotle described Phronesis as the happy balance between knowing what to do – and knowing how to do it.

Strategy is the domain of the general manager who continually cycles between reflection and action, sees the concrete results of a given hypothesis, how well it was executed, and why is produced the observed results. Such a person knows how to act effectively in concrete, real-life situations, how to motivate a team, and how to harvest and apply hard-won knowledge.

The ‘W’ Model

We owe the ‘W’ model to the great Shoji Shiba (still going strong at 93) and it remains an elegant expression of Strategy deployment - and Phronesis. The W model animates effective strategy deployment systems and builds strong practitioners. ‘W thinking’ is difficult to establish and even harder to sustain. My practice entails teaching senior leaders the supporting mindsets and skillsets.

My practice entails teaching senior leaders the supporting mindsets and skillsets - through doing. We develop & deploy hypotheses together and observe the results together. Then we keep asking why something worked, or not, till we've distilled something real & true.

The continuous interplay between Reflection & Action is most dramatic when we’re trying to ignite new Growth by creating new offerings, new markets and hopefully new businesses. Here, speed and accelerated learning are of the essence. My background in OpEx/Lean has proven enormously useful in grounding our Sprints in fundamentals like visual management, standardized work and level loading. A key enabler is insisting that team members ‘toss the ball’ back so that we connect Reflection & Action and can harvest the associated learning.

That, and building the required ‘nudges’ into our management system.

 Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

 

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

Stratex Blockers – Where Are We Going?

 Who are we, and what do we believe in? Where are we going, and how will we get there? Such are the core questions of Purpose. How well we answer such questions – as people & organizations – determines clarity of Purpose – or lack thereof. So how do we answer them?

To define your Purpose is to look up toward a better future. Doing so is uplifting in that it pulls you out of your current quagmire and forces you to consider the entire chessboard, design space, or gestalt, if you will. Everything is connected and if you look closely enough, individual parts form meaningful patterns, which often are the key to strategy.

Who are we and what do we believe in?

Answering such questions requires an intuitive understanding of your history, formative experiences, victories & defeats, and their why & wherefore. A useful subordinate question is: Where do we come from? This is difficult for young companies and especially so for startups, which explains why such organizations often have dreadful, abusive cultures. Often the leaders of such companies cannot imagine anything different because there are no signs, no precedents. There is no Dave Hewlett or Bill Packard, no Charles Kimberly or John Clark history to guide them. And no sages to whisper, ‘What would Dave & Bill have done?’

I’ve been lucky enough to work for some years with a fine international Insurance & Wealth Management firm that has a deep connection to its 150-year history – a history of achievement, stability, and community service. The corridors leading the Board room display foundational images, and the portraits of senior leaders beginning with the founder. The message is unmistakable – This is where we come from, who we are and what we believe in. Needless to say, helping answer such questions is an essential element of my practice.

Where are we going and how do we get there?

Here are helpful subordinate questions, courtesy of Roger Martin: ‘Where will we play & how will we win?’ The first part of this entails defining what markets, what offerings, what part the of the value chain and such. The second part entails defining a compelling ‘winning logic’ that everybody from the C-suite to the front line understands and can explain.

The Stick Model of Value is a useful framework for telling your story. Will we win by creating more Value & thereby increasing the customer’s Willing to Pay? Or by continuously reducing our cost by engaging all team members in waste reduction, so that we sell more? Or permutations thereof?

A high-end recreational vehicle supplier I know has defined their winning logic as follows: ‘Speed – Cost – Innovation: 1) We’ll be faster at design & deployment than our low-cost offshore competitors by…, 2) We’ll reduce of cost of labor through Lean/OpEx methods to less than 20% of total cost so that it’s irrelevant, and 3) We’ll have the best Tech & innovation in our industry by…’

Result? On familiarizing himself with the books, the new CFO said to me, “This place is a cash machine.’  The company also has a rich sense of where they come from & a history of decency & fair play. As a result, people stay, get better & better at their work, and contribute. Win-win.

Last thing, can you outsource all this to AI?

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

Stratex Fundamentals – Goal Setting

How do we set strategic targets? What does our trajectory typically look like? What drives it? Do the StratEx lessons I learned as a young Toyota engineer & manager still apply?

Aim for the fences, settle for a double off the wall...

I grew up in the ‘90’s on a steady diet of the Toyota Production System (TPS). Our compass through the churning waters of continuous expansion was a business system called ‘Hoshin Kanri’ or Strategy Deployment. I’ve experienced countless cycles now & have written about it extensively. The past decade my practice has evolved toward ‘ambidexterity’ and fields like financial services, consumer goods & Tech. My hypothesis: those will prosper who can both protect the core business with OpEx and ignite new growth with Digital methods. 

So, do the TPS methods & mindsets I learned as a young engineer & manager apply? Yes, provided you translate & adapt them for each industry.  A common failure mode: ‘Here’s how we did it at Toyota ABCD…’, to which the COO, CFO, CMO, CIO et al respond, quite reasonably, ‘Who cares…?’ With that prologue, let’s see if we can answer the questions posed above.

How Do We Set Strategic Targets?

Set targets just beyond what your team thinks they can achieve. How do you know what they think? By scheduling Daily/Weekly/Monthly management walks. Okay, maybe Daily is difficult for a senior executive to sustain, but you know what I mean. To set targets you must know your business & team, which means you have to be there. Thus, you can answer core leadership questions like:

·       What is the nature my team? What is the nature of our industry & competitive challenge?

·       What is the capability of each team member? What motivates (or demotivates) them? Under what conditions do they thrive (or struggle)?

·       How capability are our processes? What are common failure modes?

·       What robust is our hardware? (Machines, info systems, supply chain…)

·       What is the capability of our software – both information systems, and culture?

·       What are the strengths & weaknesses of our management system?

Setting targets this way often produces a trajectory like the one I’ve illustrated. We don’t quite achieve our targets, but year after year we get stronger & build our muscles. In a few years, we’re a tough, capable team.

Failure Modes

Setting modest, unimaginative targets is perhaps the most common failure mode. What can cause this? Poor incentive structures, a weak grasp of blockers, unclear & unreliable data because of cumbersome central systems and a lack of YODA (Your Own Data)

Setting outlandish targets absent any real understanding of the business, team & competitive challenge is also a common mistake.  This is akin to the general manager of a baseball team blithely ignoring the team’s weaknesses & competitive position, while demanding they win 150 games next season and sell out every game.

A third common error is not setting effective improvement process targets. Want people to get good at value-added problem-solving? Set explicit targets for each team & check on them regularly. Start with modest targets, e.g. ‘Each team will close one significant problem per quarter usually scientific problem solving. Recognize & reward high achieving teams, e.g. with a ‘Problem Solving Expo’ or ‘Fair’ wherein teams demonstrate what they’ve been working on & the value they’ve derived.

Next time, what drives Stratex achievement & how do we sustain it?

Best wishes & a splendid 2026,

Pascal Dennis         E: pascal.dennis@leansystems.org

 

Strategy – What’s Changed & What Hasn’t?

It’s best of times & the worst of times – and it was ever thus.  So, when it comes to Strategy deployment & execution, what has changed & what has not?

What Has Changed

AI has made it easier than ever to answer generic questions of Strategy:

·       Given our business situation, what is our aspiration & winning logic?

·       What OKRs should we use and how should we deploy them?

·       What should our dashboards look like?

·       How do we set up our Obeya (aka Control Tower, Big Room, Cockpit)?

AI also makes it much easier to answer Growth questions like:

·       What’s the size of this market, how fast is it growing and what are historical profit margins?

·       Who are the main competitors & what are their strengths & weaknesses?

·       Who are the key customers in this market, and what do they value?

·       What are current customer satisfaction levels & what opportunities might new entrants exploit?

And so, AI can help you begin to understand the nature of the challenge, and generic approaches you might use to handle it. To use chess analogy, AI can help you understand the basic shape of the board, how many pieces there typically are, and sometimes, how these pieces move.

That’s not nothing, and if we understand AI’s limitations, it’s a helpful start. But if we stop there, we’ll just release more AI-slop & create waste & hassle for our organization.

What Has Not Changed

Strategy deployment & execution remains a messy, ragged human thing, an affair of the heart and of intuition & gut feel gained by decades of work & thoughtful reflection. It’s not enough to articulate an AI-formulated-sort-of-maybe-just-okay winning logic. People can sense & seem to have an innate revulsion to AI slop.

Moreover, developing & deployment a sound strategy is akin the achieving physical fitness through a commitment to a sound workout regime. You have to do the work. If the workout regime calls for daily jogging but you decide to drive, you’ll remain flabby.  Similarly, if rather than walking the value stream and customer journey, doing the messy work of Catchball and all the rest, you default to AI, your strategy will blah-blah-blah.

Leaders at all levels have to validate the aspiration & winning logic with their teams through messy open forums I learned as ‘Catchball’ wherein the leader invites pushback & translation.  ‘Am I on the right track; is there anything I’m missing; can you please share this your teams & come back with what you can do to support this plan.’

Catchball is of course based on data, and ideally YODA – your own data & not stale, incomplete, irrelevant data provided by some out of touch corporate system. Without YODA strategy execution can quickly degenerate into HIPPO (highest paid person’s opinion) & ZEBRA (zero expertise but really adamant) management.

The Value of our strategy (or of any initiative) is a function of the Quality of the intervention and the level of Acceptance: V = Q x A. People dislike AI slop & they don’t respect phony strategies or phony people. And brings us to something else that has not changed: the mysterious catalyst/accelerant called Leadership.

In the Age of AI, Leadership is the Killer App

Leadership is the killer app. Good leaders articulate high quality strategies because they have a deep, intuitive grasp of the industry, value stream, technology, customers and their journeys. Good leaders foster acceptance of the agreed upon aspiration and winning logic because they walk the value stream and the customer journey. They ask, ‘What do you think?’ in a spirit of humble inquiry

In summary, when it comes to Strategy deployment & execution, what’s changed is AI, and what has no changed is the messy, human work of alignment, and the centrality of Leadership. AI can be a fine servant but is a poor master.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org