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

Ambidexterity – the Leadership Challenge (part 1)

Ambidexterity is Job One. Sustained prosperity in the 21^st century entails navigating in to very different worlds, first articulated by Aristotle. Senior leaders & the Board need to learn & practice two different mindsets and ways of working.

Why build something nobody wants?  Steve Blank

Ambidexterity entails the ability to both:

•  Protect the core business with the proven methods of OpEx/Lean, and
•    Ignite new Growth using the Digital methods of the world’s innovation hot spots 

2.     I’ve spent much of the past decade helping senior leaders & Board members navigate these two worlds.  I’ve described transformation blockers in detail in earlier blogs. In this series, I’ll discuss some of the challenges leaders face.

 Achievement in the World of Operations Can Be a Blocker

 Most senior leaders come from areas like Operations, Finance, Engineering or Technology. This is Plato’s World of Necessity – a world that follows natural laws, accepted standards, and codes of practice. This is the world of physics and chemistry, mathematics, the Toyota Production System, and Generally Accepted Accounting Principles.

 In this world, things cannot be ‘other than they are.’ For example, the energy in a Carbon - Carbon bond is 348 kJ/mol, whether you’re in Seoul or San Francisco. If you mix a polar salt like sodium chloride with a polar solvent like water, the salt will dissolve into its constituent ions (Na+ and Cl-). It happens every time, whether you’re in Tokyo or Toronto. I like the World of Necessity. I was trained as a chemical engineer & cut me teeth of factories around the world. I like natural laws – you can depend on them.

The past decade I’ve learned to work in the world of disruptive Innovation – Plato’s World on Contingency. This is the world of culture, opinion, style, fashion, politics and the like. It’s a place where things ‘can be other than they are’.  People say one thing - and do the opposite! Customers assure you they love your new offering and then stay away in droves.  You have a great market, and then it disappears for no discernable reason. You build the ‘better mousetrap’, and nobody cares. Though they’ll tell you they love it and will definitely buy it!  Different rules apply here.

And so, what you learn in the World of Necessity is often a blocker in the World of Contingency.  Here we face ‘complex’ problems for which there is no accepted approach, standard or code of practice. There are so many unknowns (both ‘known’ and ‘unknown’) that we have to 'Probe-Sense-Respond' our way to a remedy. In other words, remedies emerge through continuous experimentation, and a happy alchemy of data & intuition.

Imagine you’re a senior leader in a major Manufacturing, Aerospace, Healthcare, Construction or Financial Services company. You’ve grown up in the world of science, mathematics, standards and codes of practice.  Your company is rightly proud of its zero defect, high reliability, root cause problem solving culture, and of its mastery of complex technology.

Will you be comfortable in a world where 90% of your experiments fail?  All your instincts rebel against the idea, no? The difference in approach between Taiichi Ohno (father of the Toyota Production System) & Jony Ive (Steve Jobs’ Chief Design Officer) is immense. Leaders nowadays must understand both & be able to fluidly switch gears based on where they find themselves.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

The Day My Pareto Chart Broke Down (We Do Not Understand the Customer, part 2)

 I was a Toyota-trained engineer & entrepreneur who was committed to eliminating waste & creating value. I had started companies & written OpEx/Lean books. I thought I understood the customer. My illusions were shattered in Singapore.

My friend and colleague, Laurent Simon, helped me up a steep learning curve. We worked together in east Asia’s Financial Services & Consumer Goods industries and eventually built an innovation practice. We even wrote a book about our adventures & ideas.

Facts inform decisions, emotion drives action.

New Growth, I learned, depends on how well we answer the following questions:

1. Who is the customer?
2. What does the customer value?
3. Why do they buy (or not) from us?

At first, I approached these questions like an engineer (in our book we call this the ‘Hacker’ mentality). The results were discouraging. I learned that people say all manner of things they don’t really believe or say things they think you want to hear. I learned that people often don’t know what they want - until they see it.

I learned that how people feel and how they look to their peers is more important than a product’s functionality. And I learned that people change their minds repeatedly for no apparent reason. Turns out people are much more unpredictable than a manufacturing process or a chemical reaction... Duh.

I was learning what Aristotle had taught the world 2,400 years ago.  There is the World of Necessity, and the World of Contingency. Laboratories, factories, supply chains, science, mathematics and Operational Excellence live in the former.  Taste, fashion, opinion, politics and style live in the latter. And the latter is much dicier place, full of known and unknown ‘unknowns’. The latter is place where customers like or dislike something for no apparent reason, where trends appear, disappear or reverse without any apparent logic.

What I’d learned as an OpEx leader worked well in the factory and supply chain - and not so well in the volatile, uncertain, complex and ambiguous world of the customer. I had to accept that all I’d learned as an OpEx leader was necessary, but not sufficient. I did not understand the customer - not even close.

‘We have to understand the customer,’ Laurent said, ‘better than they understand themselves.’ At first, I thought it was marketing tosh. Eventually, after multiple sprints and new product launches, it finally clicked for me.

In fact, I remember the moment when my world view shifted. We were working with an innovation team in the Wealth Management industry. Our focus was the coveted ‘ultra high new worth’ (UHNW) customer segment. Laurent, the project leader, led the team through a series of Discovery and Validation experiments, seeking to begin to answer of the key questions posed above: What does the customer value?

Donning my Toyota engineer cap, I did a risk analysis of the pain points we’d identified, ranking them using a familiar Risk Management Index (Risk = frequency x severity). I put together a Pareto chart and suggested we focus on the top three.

Laurent disagreed. ‘That’s what our competitors are doing. And their performance – and ours - is the same across these parameters. It’s a wash, it’s trench warfare. That’s not where Value lies.’ He then pointed out a barely perceptible pain point, to me at least, related to the clients’ elderly parents. He hypothesized that solving this fear was a key to delighting these customers.

‘I have to disagree,’ I replied. ‘The frequency is very low, and the severity is low. The parents would some low-level anxiety for a short period of time. We should focus elsewhere.’

I was thinking like a ‘Hacker’ – a term we used in a book we wrote about our Singapore adventures. Laurent was thinking like a ‘Hipster’ - one who can intuit the entire customer journey by putting themselves in the customer’s shoes. ‘You don’t understand,’ he replied. ‘Asian cultures revere their and ancestors. UHNW individuals are focused on life & legacy goals, as well as financial goals. If we solve this difficult problem, we’ll delight them – and they’ll tell all their friends about it.’

That’s how we found our Blue ocean – and that’s when the light came on - click!  Our goal was to find a place far away from the highly crowded and competitive traditional UHNW market (Red ocean). The segment has evolving needs that go beyond investment returns. Here was an opportunity to create non-traditional value and differentiate deeply.

‘Growth hacking’ helped us understand the UHNW customer better than they understood themselves. And I learned that my OpEx/Lean knowledge was necessary, but not sufficient for sustained prosperity.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org