Strategy & Agentic AI – This Changes Everything

 

We’re wrapping up one strategy cycle and beginning another. The leader team is capable, smart & funny, and pushed each another in a healthy way. (I’m their teacher.) This is the first year we’ve seriously applied Agentic AI. What are we learning?

Strategy = What, Why, How

What are we trying to achieve? Why do we want to do this? How do we intend to do it? Strategy entails answering these questions with stories and making discrete choices. “We are going to play here, and not there. We are going to this – and not that. We need this kind of management system and those capabilities to pull it off.”

How has always been our biggest constraint, no? Do we have the data, manpower, and analytical horsepower? Can we grasp & master the complexity in the market, and in our supply chain? Can we anticipate & coordinate changes in demand & supply, while levelling up the performance of our people, machinery, and value streams?

Escaping the Tyranny of the How

How does all this change in an AI world? AI agents make the How much easier. Case in point: igniting new Growth is a core theme in the strategy sessions I described above. Key tactics entail selling existing offerings in new customer segments, and new offerings in existing markets. We have a ton of historical data and related content on the customer, what do they value, and why do they buy, including a rich catalogue of social media content.

If only we could repurpose this treasure trove and thereby run quick experiments to validate our Growth hypotheses. But how are we going to do this? Such work requires judgement & experience. We can’t hire more people and there is a ton of other work to do. Our Growth-related teams are facing burn out & morale may become an issue.

The senior team expressed all these concerns & clearly felt the tyranny of the How. But the How was no longer our constraint. In fact, we able to engage young AI-savvy team members who easily built an elegant AI agent that does the heavy lifting. The AI agent scanned our voluminous inventory, clipped relevant content, and developed necessary templates, and posting schedules congruent with the projects at hand. Taste, finesse and judgement were needed of course to curate & mold the content into a coherent experiment plan. Now we have to execute the needed sprints with intelligence, reflect on results & pivot as required.

Shifting Constraints - From the How to the What

In other words, the strategic focus is shifting from the How – to the What. The constraint is now our imagination, experience, taste, and business savvy. It’s as if we’ve found a magic lantern, rubbed it, and are confronted with a big blue Genie – who will take care of the How. ‘Your wish is my command.’

And so, the constraint is now: What do we really want to do? What’s our shining city on the hill? What does success look like? What’s our ideal condition?

What does all this mean for us? For a start, intuition, taste, and business savvy will become invaluable. AI agents are like very smart research assistants. They’re great at the How but not so good at the Why or the What. Savvy business leaders, by contrast, intuit their customers & market, supply chain & factories, partnerships and relationships with regulators, universities & other important players. They have good taste and know that ‘This will fly, but that will not – unless of course, we make these kinds of changes and present them in that way.’ This is what I mean by taste – knowing how to do, knowing what will fly and what will not.

Do we appreciate how big a shift this represents & the implications for leaders? On a personal level, my role as a teacher & mentor is evolving into curator of taste, shaper of what’s possible, and nurturer of the imagination.

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

 

The Magic Lamp – Making Strategy Fun Again (Part 4)

 

Strategy deployment & execution are entering uncharted waters.  A magical capability is emerging, a ‘big blue genie’ if you will, of awesome promise, and more than a little peril. How do we harness the Genie’s power while mitigating the risks? What does it mean for Leaders & the practice of management?

The Fundamental Questions of Strategy

Almost all strategies can be expressed in terms of the marvelous mnemonic What, Why, How:

·       What are we trying to achieve?

·       Why do we want to do this?

·       How will we do this?

Indeed, the leader’s Job One is defining our Aspiration (What), rationale (Why) and winning logic (a high-level expression of How). Up until very recently, our What has always been constrained by the How.  Do we have the workforce, technology, machinery, capacity, governance & management system, supply chain, time and energy? Do we have the financial resources to plug gaps in any of these?

My Japanese senseis always encouraged me to imagine the ‘Ideal Condition’.  What does perfection look like?  Imagine the perfect process, production line, value stream, factory, and new model launch. As my practice expanded into new Growth using exponential methods, I tried to imagine the perfect customer journey, innovation sprint, experiment cycle, MLP, MMP, MVP, senior leader playback & pitch, and the like.

But I’ve always felt the constraining How.  Just how are we going to do this, given all the blockers including our ever-present resource constraints? I know I’m not alone.  Keeping an eye on the How as you define the What & Why is an element of prudent leadership. For example, asking a team to do something that is physically impossible is a morale killer. (Do they have any idea what we have to deal with every day?)  But the How can be a dark cloud that intimidates a team & constrains our vision.

The Constraint is no Longer ‘How?’

Agentic AI is akin to a magic lantern. We now have access to big blue Genei with magical powers. The Genie is neither good nor bad, but simply carries out the ‘master’s’ wishes, quite literally, and therein lies the peril. Ask the Genie to ‘increase the value of our investment portfolio’ and he or she will come up with multiple strategies, some immoral or illegal. Most people would agree that we lack the safety systems to constrain the worst of these tendencies.  Hopefully, we’ll have enlightened regulation before too long to protect society from such risks.

In any event, the AI Genie makes the How less daunting. Case in point: our innovation sprints in the consumer goods industry entail significant social media content creation including Shorts, Explainer Videos, Landing Pages in a wide variety of channels. We use these to help answer core Growth questions - (Who is the customer? What do they value? What do they buy or not buy…?).

Repurpose our extensive inventory of assets would be great, but it’s a lot of work and many partners have lacked the resources – until now. In a recent gig we were able to quickly create AI agents that do this work quickly, easily & affordably. Net result: we can run many more experiments, harvest better insights quicker & nimbly adjust our offering so that we get closer & closer to our Blue Ocean. In other words, the How is no longer the constraint. The constraint is now…

Imagining the What

What is the Ideal condition?  My senseis’ question takes on a deeper significance. The ‘What’ is no longer our strategic constraint – our imagination is the constraint.  Can we envision perfection, can we let our imagination free unconstrained by the tyranny of the How?  The Leader’s Job One is now not merely ‘What should be happening?’ but ‘What is the Ideal?’ How long will it take senior leaders and the Board to fully absorb this? And how do we build this into our governance and management system? More to come

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