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

 

Levelling Up the Centre of Excellence

 

Is the Centre of Excellence (CoE) still relevant? If so, how is its role changing, and how do we level up its capability? What are the biggest blockers & most common failure modes? What are the countermeasures? Such are my topics today & over the next few weeks.

What’s the Role of the CoE?

I’ve worked with CoEs for a couple of decades now & have seen them evolve in different directions. The CoE (aka Centre of Expertise/Capability/Competence, Maker’s Space, Digital/Innovation Hub) should act as a networking mechanism that helps us move from disorganized, siloed work to focused, aligned, informed and value-added work. The CoE’s core functions comprise five key pillars:

1. Standardize & Share Best Processes & Methods

·       Function as the ‘hub’ for a specific area (like Lean/OpEx, Innovation, Cloud, AI).

·       Define & share our current ‘best ways.’

·       Ensure we’re aligned across the organization.

·       Ensure quality of learning & application.

2. Build Knowledge & Capability

·       Identify key knowledge gaps: what ‘should’ we know vs what we ‘actually know.’

·       Sustain ‘Book of Knowledge’ summarizing applications to date & what we learned.

·       Upskilling & Coaching: Providing ‘learn by doing’ training, mentoring & "train-the-trainer" programs.

·       Share Learning by developing communities of practice (CoPs) sharing cross-team wins & losses.

3. Lead, Align & Connect

·       Define Vision & winning logic for a specific technology or capability aligned with company goals.

·       Thought Leadership: Wise direction; evangelize new ways of working.

·       Change Management: Support new ways of working by managing stakeholder expectations.

4. On-Demand Support

·       Advice for complex or high-risk projects.

·       Provide access to scarce or high-demand resources (e.g., Cloud, data scientists) that individual teams can’t otherwise access.

·       Methods & Tools: Oversee selection, implementation, and optimization of shared platforms.

5. Create Value through Innovation & Continuous Improvement

·       Piloting New Tech & New Ways of Working: Pilot innovative methods or technologies before full-scale deployment.

·       Continuous Improvement: Root-cause problem solving to constantly refine processes & methods.

 

How Is the CoE’s Role Changing?

Ambidexterity

The explosion of new ways of working, including Digital technology & methods has put intense pressure on the CoE (& everyone else). 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. (For more on ambidexterity check out my blog & books).

Ambidexterity is especially important for the CoE. Here’s a recurring scenario: we jump to an expense Digital solution (e.g. RPA or Agentic AI) when a Lean/OpEx solution would be quicker, better & cheaper. The reverse scenario is also common: We commission a Kaizen event when we really need Growth Hacking. The net effect is the same: the CoE loses credibility.

Some organizations try to address the problem by setting up parallel CoE’s – one focused on Lean/OpEx and protecting the core business, the other on Digital methods (Cloud, Data, AI) and Growth. This can work if there is strong alignment & cross-fertilization between teams, but the risks are obvious. Business transformations almost always begin with fixing the foundation with Lean/OpEx. This essential work typically entails dozens or hundreds of process improvement events. Doing such work positions the CoE for the next part of the journey – automation & digitizing the new process. Splitting this work between two groups short-circuits ambidexterity. The proverbial left & right hands are disconnected from the start.

Towards an Ambidextrous CoE

Protecting the core business with Lean/OpEx & igniting new Growth with Digital is hard because each entails different mindsets & skillsets. In fact, they reside in two different worlds, first articulated by Aristotle. (See my articles on Contingency & Necessity).

How do we build a CoE comprising individuals at home with the mindsets & methods each world? How to build a CoE that can both protect the core, and ignite new Growth? Stay tuned.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

First We Make the Tool – Then the Tool Makes Us

 

I paraphrases McLuhan paraphrasing Churchill. Both knew something about shaping human consciousness. Half a century ago we began an extraordinary experiment by making the personal computer widely available. With Agentic AI, we’re entering a new phase. What would McLuhan & Churchill say?

The Strange Case of Norway

In 2016, Norway gave every child in the country their own iPad or similar digital device. Today Norway is restricting and/or banning digital devices from primary schools. Their rationale: declining literacy & cognitive ability, distraction & reduced focus, and declining social & mental health.

Are we not running a version of Norway’s experiment in private & public organizations around the world? There are two hypothesis in play here:

1.     IF we provide our people with AI tools, THEN we’ll create value – smarter innovation, better processes, higher productivity & quality, happier team members & customers.

2.     IF we do not do this, THEN we’ll fall hopelessly behind.

What Could Possibly Go Wrong?

First we make the tool, then the tool makes us. How does AI make us? On the plus side, AI saves time & effort. In earlier blogs I’ve described how AI agents can free us from the tyranny of the ‘How,’ so we can concentrate on the ‘What.’  I’ve described how AI agents enable our innovation sprints, freeing us up to focus on the ideal product, service, and customer experience.

Will AI & AI agents degrade our ability to think & to create?

Will we see a repeat of Norway’s experience in our public & private organizations? AI is a boon to lazy, dishonest, and unimaginative. Why write, draw, compose, imagine something when you can steal it? We’re seeing AI’s devastating effect on creator economies. Will art & creative endeavour become extinct? It’s no longer an unimaginable question.

There are notorious Tech execs, for example, who boast about ‘gamifying’ music creation. Why play an instrument when you can scrape all the music ever created, pour it in into the gaping maw of your AI, and charge a monthly fee for access? ‘Making music is too hard,’ a Tech Socrates opined recently. ‘You have to learn an instrument & scales, and you have to practice. Our app makes it really easy.’ A similar process is unfolding for essays & other long-form writing, journalism, graphic arts, novels and short stories, and film.

Use It or Lose It

AI & AI agents can make us stupid. How to sustain our edge? Do it yourself – with the help of your AI assistant. Building on earlier articles, we must recognize that AI agents are akin to the big blue Genie in Disney’s Aladdin. They're capable of handling the ‘How’ but hopeless at the What & Why, which is where humans excel. In my view the centaur metaphor – human + machine – remains optimal.

Humans should therefore focus on the What & Why, which includes building alignment around a shared vision, and on deploying the plan to the front line. Humans must build the management system that enables fluid responses to emerging issues, and the front-line capability needed to continually solve problems.

We should engage our big blue Genies in the How, where they excel. And we must continually exercise our cognitive muscles by solving strategic management problems as they arise. The OpEx/Lean and Innovation fundamentals described in my blog, and books remain valid and essential. We just have an eccentric but highly capable new team member to help us.

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