How Do We Win in an AI World? (Part 1)

 

Is the bloom off the AI rose?  AI optimism seems to be collapsing under a black wave of AI gloom.  To be sure, the effects of AI are everywhere, both good and bad, though the bad tends to grab the headlines. My practice is focused on improvement & innovation– both Digital & analogue.  What am I seeing & what does it mean?

Companies I work with are facing the following conundrum: How do we harness the power of AI while avoiding the jagged rocks dominating the headlines? The pushback against AI is real & growing.  People are rightly worried about their jobs, as industry after industry comes under attack. (And are humans not increasingly repelled, especially by AI in disguise, pretending to be human?)

Let’s imagine we are a large multinational customer-facing company. We have an honorable history of service to our communities, team members and shareholders. We’re under intense competitive pressure & are facing daunting Innovation, Lead Time & Cost challenges. Like so many of our peers, we’ve invested heavily in AI and know the Board expects a rapid ROI. And yet, our team members, though loyal & capable, are understandably hesitant to apply AI tools to improve productivity, reduce & otherwise improve our business. What to do?

AI’s challenge is not unprecedented. In fact, it reminds me of the challenge presented by Robotic Process Automation (RPA) a decade or so ago when it began to be applied at scale in industries like Financial Services. RPA is deterministic AI (If X, then Y) and has been used to automate data entry, invoice processing, and other high-volume, routine tasks. Agentic AI is non-deterministic (If X, then Y or maybe Z or maybe W) and excels at complex, cognitive tasks like customer support, strategic planning, or managing end-to-end IT operations. Unlike RPA, Agentic AI makes decisions based on your needs & the situation on the chessboard. Moreover, and this is perhaps what scares people most, Agentic AI learns through repetition. This is why chess programs like Leela and Alpha Zero continually get stronger, so much so, that human World Champions struggle to secure even a draw against them.

Many of the lessons we learned with RPA apply to Agentic AI. So, how do we win in our brave new world? Let’s begin with the most basic point: Agentic AI, like RPA, is a tool. As such, it can be an good servant but is a dreadful master. Let’s therefore, in every use case, define the problem we are trying to solve, and only then consider what tools might suit. As we’ll learn in coming articles, Agentic AI is rarely the first too you reach for.  Stay tuned.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

How Do We Test Our Winning Logic?

 

How do we test the winning logic underlying our strategy?  How do we avoid the Innovation Theatre & corporate kitsch I’ve described in earlier pieces – smart people going through the motions pretending they’re creating Value?  The Board & senior leader team are often at a disadvantage, lacking the day-to-day connection with the front line, suppliers and customers.

The Value Stick

The Stick is a rough & ready way of testing our winning logic. Ambidexterity is a prerequisite. Can we both protect the core business with OpEx/Lean, and ignite new Growth using Digital methods?

Here are the Stick’s key components:

·       Willingness to Pay - can we increase WtP by providing kick-ass offerings that wow the customer?

o   Can we find new customers, new undiscovered needs, satisfied by news offerings; new channels; new levels of customer understanding & connection that open up new markets – the proverbial Blue Ocean?

·       Price – can we provide so much value that the customer readily pays more?

o   Here, facility with both OpEx/Lean & Innovation methods is essential.

o   A tremendous manufacturer who continually improves the process will both reduce waste and also increase Value in the customer’s eyes. (‘I no longer have to worry about that…’)

o   Similarly, an adept innovator with a deep, intuitive understanding of the customer can identify invisible opportunities that cost little to address but utterly delight the customer.

·       Cost – this is the arena of OpEx/Lean. Most industry remains awash in waste, which represents a giant ‘hidden bank account.’ 

o   OpEx/Lean leaders know both how to find these, and as important, how to engage their people in harvesting the gains.

·       Quantity – means getting people to buy more, which is the wheelhouse of growth hacking & other innovation hacks.

o   Possible means: partner with simpatico companies, develop adroit pricing strategies, understand & access where customers hang out, reduce buying friction, remaining relevant and top-of-mind with funny, engaging just-right content in the right channels.

Caveat: be aware of the Innovator’s Dilemma.  The Value of a given innovation cannot in its early stages be measured by conventional accounting methods – all the standard Value metrics are zero.

Use these elements to test your winning logic. At the very least, you’ll generate a meaningful discussion. Is the Stick enough to validate your strategy? No, but it’s a great way of testing & validating our thinking.  Validating your Strategy entails a good deal more, a topic I’ll take up in upcoming pieces.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

 

Innovation Theatre Destroys Value – So What’s the Remedy? part 1

 

Ever attended a Sprint or Stratex deep dive that looks good on the surface, but everybody knows, ‘This has no value.’?  ‘Innovation Theatre’ is closely related to what Czech novelist, Milan Kundera, called ‘kitsch’. Phony, tasteless, or overly sentimental, kitsch embraces cliché & superficial emotions, while lacking depth and authenticity.  In dysfunctional organizations, kitsch manifests as the feeling “Isn’t it great that we’re so [fill in the blanks]”.  As in Kundera’s 1960’s Czechoslovakia, everybody knows it’s phony, but nobody dares say anything.

Authenticity

Whether you’re trying to protect the core with OpEx/Lean, or ignite new growth with digital methods, Innovation Theatre is a clear & present danger, which not only fails to create value – it destroys value. So, what’s the remedy?

Recognizing Kitsch

How does Senior Leader Team & Board recognize Innovation Theatre & corporate kitsch in general? Recognizing it in OpEx-related activities is fairly straightforward. Ask yourself: ‘Would the CFO recognize any value here?’

Recognizing kitsch when you’re trying to create something entirely new is harder because of the Innovator’s Dilemma.  Entirely new offerings fail the CFO test because all the standard measures of value (Revenue, ROI, market share and so on) are zero.  This means we need a different way of measuring (Innovation Accounting), which I’ll take up in later articles.

Remedies to Innovation Theatre - Authenticity

Authenticity is the simplest & most daunting remedy.  Personal authenticity means I who know who I am, what I believe in, where I come from, and where I’m going.  Corporate authenticity means the senior leader team can answer these questions on behalf of the company in clear & compelling way.

In such organizations, OpEx & Innovation sprints & playbacks (not to mention senior leader & Board meetings) are focused, factual, serious and often light-hearted (because you don’t have to fake it). The mantra of such organizations is some variation of ‘Target, actual, please explain’, a powerful phrase which embodies the following mental models:

·       We take targets & commitments seriously.

·       We don’t lie about what’s actually happening; we accept reality full on

·       We deal with problems directly & openly.

·       This is a ‘No blah blah blah’ zone.

Authenticity is rooted in a deep commitment to the common good, to the ‘triple bottom line’, if you will. In the words of a respected mentor, ‘Something for the community, something for the team member, and something for the company’.

Authenticity also entails answering the following question is a frank & honest way: ‘What’s in it for you?’ Failing to do so is a form of kitsch. People hear the rhetoric about continuous improvement & breakthrough innovation and wonder, “Are we going to innovate our way out of a job?”.

Role of Leaders

Leaders, therefore, must embody authenticity rooted in simple decency and respect for people. For this reason, in the age of AI, authenticity is the gamechanger, catalyst & killer app. And as the public tires of AI slop, authenticity will grow in importance & value

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

#Innovationleadership #Authenticity #AuthenticLeadership #InnovationTheatre &phonyimprovement #corporatekitsch

Stratex Blockers – Innovation Theatre

Ever attended a Sprint or Stratex deep dive that looks great on the surface – lots of high fives & smiling faces – but leaves you with a nagging feeling that ‘nothing will come of this’? 

Welcome to ‘Innovation Theatre’. Whether you’re trying to protect the core with OpEx/Lean, or ignite new growth with Digital, this pernicious syndrome is a clear & present danger, which not only fails to create value – it destroys value.

Innovation Theatre is closely related to what the great Czech novelist, Milan Kundera, called ‘kitsch’. Gaudy, tasteless, or overly sentimental, kitsch embraces cliché and superficial emotions. Kitsch can be seen as a form of escapism, providing comfort through familiarity while lacking depth and authenticity.  In dysfunctional organizations, kitsch manifests as the feeling “isn’t it great that we’re so innovative/supportive/engaged/aligned…” (fill in the blanks).  As in Kundera’s 1960’s Czechoslovakia, everybody knows the system is phony, but nobody dares say anything.

How do we recognize Innovation Theatre? What causes it & what are the remedies? What’s the role of the Board and Senior Leader Team in recognizing and banishing kitsch? What are the blockers to doing so? 

I’ll be addressing these and other questions in the weeks to come. 

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org