The Ambidexterity Challenge – What’s Our Overall Approach?

Ambidexterity is the senior leader’s Job One & entails developing the ability to both:

1. Protect the core business with the proven methods of OpEx/Lean, and
2. Ignite new Growth using Digital methods & thinking

It’s an immense challenge for senior leaders and the Board. Let’s imagine they're are fully aligned & agree to move forward.   What’s our overall approach?

Based on our experience in multiple industries, the following generic logic is a good starting point: 

1. Take out the waste & variation, 
2. Get close to the customer, and 
3. Get Digital to the core

You'll of course tweak, refine, and adjust what you emphasize based on your business situation, but you can’t go wrong if you start with this overall logic.

Take Out the Waste & Variation

It’s not unusual to do dozens of process improvement events (PIEs) in the first few years. OpEx/Lean principles have made major inroads the past few decades but companies that practice them consistently are in the minority.  Bluntly stated: OpEx/Lean is hard. Much ink, tears & vitriol have been spilt debating why this is so. 

Please note that I’ve included Variation in the formula.  Variation degrades the management system. In fact, W. Edwards Deming called it a ‘virus’ that infects everything. PIEs must not devolve into mere ‘scavenger hunts’ for waste – that’s comparatively easy. The challenge is finding the root causes of both waste & variation and eliminating them with OpEx/Lean basics (including standardized work, visual management, quality in the process).

Get Close to the Customer

This is where things start to get interesting. In my experience, many companies believe they know the customer even though they have little direct contact or knowledge of him or her.  For example, an otherwise capable & thoughtful senior leader team comprising predominantly male, Gen Y, English-speaking Engineers & MBAs living in Chicago confidently proclaim this or that about a female, Gen Z, Chinese-speaking and deeply Buddhist persona living in a small east Asia city.

How do they know who she is, what she values and why she buys or does not buy their offering?  ‘We hired a local marketing firm to do a series of focus groups’. Good luck with that. This is where Growth Hacking & other elements of 21^st C marketing comes into their own.  But it’s a very different way of thinking & behaving for most organizations.

Get Digital to the Core

This means embracing so-called ‘exponential technologies’ like AI, Data, Cloud, RPA, AR, VR, Drones, and Blockchain. It also means embracing Digital methodologies like Agile Ways of Working, Design Thinking, Lean Experimentation, and the afore-mentioned Growth Hacking. Here’s the challenge: how to turn these methodologies into an integrated way of working?  One that makes sense for the business challenges you’re facing. Otherwise, you risk getting lost in a forest without a compass.

Each step of course, lays the foundation what follows. For example, if you digitize bad processes you will, as an RPA & Agentic AI executive told me, ‘create garbage at the speed of light’. And the three steps are cyclical, not linear. As your business challenges evolve, you’ll have to keep cycling back to step one.  As the poet said, ‘Rust never sleeps.’ Next time, I’ll talk about the nature of the journey.

Best wishes,

Pascal    

E: pascal.dennis@leansystemss.org

Protect the Core & Ignite New Growth – Ambidexterity in Practice

The ambidextrous will prosper.

Pascal Dennis, co-author of Harnessing Digital Disruption

I’ve walked two pathways in my career– OpEx/Lean, and the way of Smart Growth (applied Innovation).  Integrating them is my aspiration these past ten years. So, what does such ambidexterity look like in practice?

Some years ago, I wrote a book about planning & execution called Getting the Right Things Done.  GRTD is about protecting your core business by focusing & aligning on a clear aspiration & winning logic. Our winning strategy is typically expressed in terms of core pillars, such as People, Quality, Delivery and Cost. Each pillar’s story is told on one-page A3-sized storyboards.  Each pillar’s A3 storyboard in turn comprises a clear aspiration & winning logic.

Simplicity is a key organizing principle in GRTD – if we cannot tell a clear simple story on one page, we probably do not understand the problem. The cost of complexity is extremely high – doing nothing is often less wasteful than pressing random buttons on the hope something will work.

Love the problem is a second core principle – develop a profound understanding of what we are trying to achieve before attempting countermeasures.  Given our impatient human nature, this is very hard to do.  (‘Don’t just stand there – do something!)  Plan & execute in accord with the scientific method a third core idea. In other words, our winning logic is a hypothesis, which we must test & validate based on data.

Protecting your core business in this way provides the foundation for Smart Growth. For a start, you free up plenty of cash which you can invest in your innovation portfolio. Moreover, the core principles of Protecting the Core are aligned with those of Smart Growth.  If you’ve been practicing kaizen, Growth Hacking (‘Lean experimentation’) will not be entirely foreign. If you’ve learned the physics of Flow in a great Lean company, you can readily apply them in an innovation sprint.

Igniting new Growth entails developing a balanced portfolio of innovation projects that a) align with your overall Aspiration & Winning Logic, and b) are mutually supportive. In other words, by doing project A & B, you are better able to tackle the more challenging C. Balanced means the right combination of better journeys, new journeys & offerings, and new businesses.

Your organization’s ‘mother Obeya’ (Control Tower, Cockpit, Big Room) with look just a little different.  In addition to the Pillar report outs and visuals, you’ll have a section showing the status of your Innovation Portfolio.  The visual system we use most often is a funnel with swim lanes corresponding to the type of innovation. We’ve also had success with race tracks and regatta courses.

Your funnel has to reflect the progress of each innovation (often called a ‘proof of concept’ – POC) toward validating the key tests:

1.     Does it Wow? (Desirability)

2.     Can we make money? (Viability)

3.     Does it work? (Feasibility)

But that’s a topic for another day. If you’re impatient, you can read about it here.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

In case you missed earlier blogs... please feel free to have another look….

AI and Innovation, part 2
AI Without Acumen = Garbage at the Speed of Light
Smart Growth (continued) - the Hacker
Smart Growth - the Huslter

Smart Growth – the Hipster

Pascal Dennis, co-author of Harnessing Digital Disruption

Radical collaboration entails engaging & aligning three very different personalities – the Hipster, Hustlers and Hacker. Laurent Simon

Each of these characters correspond to a fundamental question or test each innovation must pass. If our idea fails to pass the test – Stop! And decide, do we persevere, pivot, or kill the idea? Here are the three questions & corresponding personality:

1. Does it wow? Hipster
2. Can we make money? Hustler
3. Does it work? Hacker

The sequence of questions reflects hard-won wisdom:

• If the idea doesn’t wow the customer, why bother?
• If you can’t make money, why build it?
• The ‘better mousetrap’ metaphor is flat out wrong! In fact, nobody cares about our mousetrap.

Hipsters typically have an artistic temperament. They’re able to imagine the entire customer journey from ‘I think I need something…’ to ‘Wow, I really loved that experience. I’m going to tell all my friends about it’.

Think Steve Jobs, Jon Ive (Jobs’s Chief Designer), or Remi Babinet (the architect of Evian’s famous ‘dancing baby’ campaign). The best Hipsters dig deeply into a product, seeking to discover the simplicity at its core. They believe ‘simplicity is the ultimate sophistication.’

Steve Jobs famously insisted that Apple’s ecosystem be closed so that ‘we can control the entire customer experience’. By contrast, Bill Gates (a consummate Hacker) prefers open systems to ensure access to the best technologies. Gates complained that Jobs ‘did not really understand technology’. And Jobs complained that ‘Microsoft’s customer experience was lousy’. So, it goes…

How many organizations understand & fully engage the Hipster? Here are some common Hipster laments: ‘People around here don’t understand what I can do…They think my job is to design the website.’ To be sure, some Hackers & Hustlers are allergic to Hipsters, which can lead to comic, though unhelpful episodes.

My favorite Hipster is Leonardo DaVinci, who like Jobs sought to get to the simplicity at the heart of things. I recently visited the Leonardo DaVinci Museum in Rome, which has two main sections: Paintings and Inventions – (‘Hipster’ & ‘Hacker’, no?). A measure of genius is surely the ability to fluidly work in very different spaces: in Leonardo’s case, Art & Engineering. (In Jobs’ case Design & Business; in Gates’ case, Technology & Business.)

The Hipster is the least understood & most vulnerable of the 3Hs. Jon Ive was unique in that he had Steve Jobs full support & protection. Too often the Hipsters hard-won insights are abandoned in the mad rush to ‘ship the product’! Protect & support your Hipsters; make a place for them in your company culture and at the decision-making table. We ignore their empathic understanding at our peril. Next time, I’ll tell you all a funny story about what can happen if you don’t.


Best regards,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS For more on Hipsters and 3H teams, check out our book.




In case you missed our last few blogs... please feel free to have another look….

Innovation Fundamentals - Radical Collaboration & the 3H Model
My Hockey Stick Curve, part 1
OpEx/Lean, Innovation and Wakefulness
The Difference Between Protecting Your Core Business & Igniting New Growth

Innovation Fundamentals - Radical Collaboration & the 3H Model

Pascal Dennis, co-author of Harnessing Digital Disruption

Radical collaboration entails engaging & aligning three very different personalities – the Hipster, Hustlers and Hacker. Laurent Simon

Laurent Simon, my Innovation mentor & co-author introduced me to the ‘3H’ concept. Innovations usually fail. The famous ‘hockey stick’ curve – nothing, nothing, then fantastic – is rare. And one the most common failure modes is not having the 3H’s on the proverbial bus.

Innovation thrives when three very different personality types - the Hipster, Hustler and Hacker - are present & in full flow. If one or more are absent, our innovations are likely to be flat, or even worse, over-complicated & irritating. This may help explain why startup Failure Rates are so high – (e.g., 80 to 90% in Consumer Goods).

Each of these characters correspond to a fundamental question or test each innovation must pass. If our idea fails to pass the test – Stop! And decide, do we persevere, pivot, or kill the idea? Here are the three questions & corresponding personality:

1. Does it wow? Hipster
2. Can we make money? Hustler
3. Does it work? Hacker

The sequence of questions reflects hard-won wisdom:

• If the idea doesn’t wow the customer, why bother? Indeed, why make a product that nobody wants?
• If you can’t make money, why build it? Remember, we’re talking about commercial enterprises here.
• Don’t spend a lot of money building something unless the idea has passed the first two tests. The ‘better mousetrap’ metaphor is flat out wrong! In fact, nobody cares about our freakin’ mousetrap.

Here are some corollaries:

• Wow means the customer wants it right now. “Here is my credit card. Put me on the list – I want it now!”
• Talk is cheap – the customer has to put money on the table. (We call this our ‘Mafia offer’)
• Demonstrate the product without spending a ton of money on it. DropBox famously confirmed customer appetite with a 2-minute YouTube video and a paper simulation.
• ‘Can we make money?’ often entails a ‘soft launch’ during which you confirm customer appetite for the product, pricing, projected volume, distribution and the rest of your value stream
• ‘Does it work’ entails building not only the product, but also the production & distribution system, and usually entails a full launch in a representative market.

‘Radical collaboration’ means the Hipster, Hustler and Hacker are fully involved from beginning to end and have a strong say in critical decisions. Another common failure mode is engaging the Hipster early in the process, only to exclude them from critical decisions later in the process. “We don’t really need these features, do we? Let’s drop them - we need to ship next week!” And so, the Hustler or Hacker jettison the very features the created the Wow - and wonder why nobody buys the product.

The opposite scenario is also common. Hackers, enamoured with the technology, fight to add more proverbial bells & whistles, none of which the customer asked for. The tragicomic result: the customer actively hates the product. Not only do we fail to create value, we destroy it!

In articles to come, I’ll do a deep dive on each of the Hipster, Hustler and Hacker personalities, and tell some war stories. The creative interplay between these very different personalities is interesting, and often quite funny. Each of us typically has a dominant tendency but sprint after sprint, you may find your own personality deepening & extending.


Best regards,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS: To learn more about my executive mentoring programs: Exec 101 - Protecting the Core Business, and Exec 201 – Igniting New Growth, feel free to drop me an e-mail.




In case you missed our last few blogs... please feel free to have another look….

My Hockey Stick Curve, part 1
OpEx/Lean, Innovation and Wakefulness
The Difference Between Protecting Your Core Business & Igniting New Growth
The Control Tower – Learning to See What Is

My Hockey Stick Curve, part 1

Pascal Dennis, co-author of Harnessing Digital Disruption

In the world of startups, everything is a hockey stick curve. Not in real life, of course, but the ones you see, at least. Nothing, nothing, nothing – then fantastic. Bjorn Jeffery

I’ve lived the hockey stick curve, first as a startup founder, and then as a mentor. As Bjorn Jeffery suggests, we usually fail. The ‘nothing, nothing, nothing, then fantastic’ trajectory is rare! Here are typical failure rates in different industries:

Industry-Specific Startup Failure Rates

• Information Industry: 63% failure rate after five years. (Forbes)
• Transportation and Utilities: 55% failure rate after five years. (Forbes)
• Retail and Construction: 53% failure rate after five years. (Forbes)
• Manufacturing: 51% failure rate after five years. (StartupTalky)
• Finance, Insurance, and Real Estate: 42% failure rate after five years.

And as I’ve discussed in earlier articles, new product launch failure rates in say, consumer goods, typically range from 80 to 90%.

Full disclosure: two of my five startups (40%) made money - which means we’ve been extraordinarily lucky. My success rate as a startup mentor is not quite as good, but that’s no big deal. I work with Laurent Simon, my friend, innovation sensei, and co-author. We cull loser ideas quickly, and pivot fluidly based on what we’ve learned. (‘Fail fast & fail forward’.) We work with splendid people around that world, in great industries, and have a hell of a good time. It’s an unusual path for a former Toyota factory rat, no?

So, what have I learned about Innovation and the hockey stick curve? Here’s an overview, detailed in our book, Harnessing Digital Disruption:

• Three phases:
• Confirm traction
• Soft Launch
• Full launch
• Each phase entails answering a key question:
• Confirm traction – Does it wow?
• Soft Launch – Can we make money?
• Full launch – Does it work?
• Working our way up the curve entails answering three questions (and many related sub-questions):
• Who is the customer?
• What does the customer value?
• Why does the customer buy (or not buy) from us?
• Working our way up the curve requires rapid, inexpensive (‘lean’) experiments through which we:
• ‘Discover’ answers to our questions, and
• ‘Validate’ what we have discovered
• This process is iterative, continuous, and entails the disciplined application of the scientific method (Hypothesis – Test – Observation & Reflection – Learning)

And here are some other learning points. None of this works without good visual management. We have to make the invisible ‘information elephant’, visible. None of this works without a disciplined, iterative process – day after day, week after week and sprint after sprint.

Lastly, Innovation and the hockey stick curve are highly abnormal. They’re like fragile hot-house flowers vulnerable to cold winds, harsh chemicals, and dry infertile soils. That’s why we insist on ‘Executive Air Cover’ – to give the flowers a chance to root & grow. We have to protect Innovation and create space for it – physical, financial, strategic, cultural and temporal space.

Some companies are lucky and have the ‘startup gene’ in their DNA. More often, Innovation is foreign and triggers corporate antibodies. As in nature, these antibodies are doing what they’re designed to do. But actions meant to be protective sometimes turn out to be destructive. (Thank you, Clayton Christensen). More to come.

Best regards,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS: To learn more about my executive mentoring programs: Exec 101 - Protecting the Core Business, and Exec 201 – Igniting New Growth, feel free to drop me an e-mail.




In case you missed our last few blogs... please feel free to have another look….

OpEx/Lean, Innovation and Wakefulness
The Difference Between Protecting Your Core Business & Igniting New Growth
The Control Tower – Learning to See What Is
The Hardest Thing - Seeing What Is