Stratex Blockers – Where Are We Going?

 Who are we, and what do we believe in? Where are we going, and how will we get there? Such are the core questions of Purpose. How well we answer such questions – as people & organizations – determines clarity of Purpose – or lack thereof. So how do we answer them?

To define your Purpose is to look up toward a better future. Doing so is uplifting in that it pulls you out of your current quagmire and forces you to consider the entire chessboard, design space, or gestalt, if you will. Everything is connected and if you look closely enough, individual parts form meaningful patterns, which often are the key to strategy.

Who are we and what do we believe in?

Answering such questions requires an intuitive understanding of your history, formative experiences, victories & defeats, and their why & wherefore. A useful subordinate question is: Where do we come from? This is difficult for young companies and especially so for startups, which explains why such organizations often have dreadful, abusive cultures. Often the leaders of such companies cannot imagine anything different because there are no signs, no precedents. There is no Dave Hewlett or Bill Packard, no Charles Kimberly or John Clark history to guide them. And no sages to whisper, ‘What would Dave & Bill have done?’

I’ve been lucky enough to work for some years with a fine international Insurance & Wealth Management firm that has a deep connection to its 150-year history – a history of achievement, stability, and community service. The corridors leading the Board room display foundational images, and the portraits of senior leaders beginning with the founder. The message is unmistakable – This is where we come from, who we are and what we believe in. Needless to say, helping answer such questions is an essential element of my practice.

Where are we going and how do we get there?

Here are helpful subordinate questions, courtesy of Roger Martin: ‘Where will we play & how will we win?’ The first part of this entails defining what markets, what offerings, what part the of the value chain and such. The second part entails defining a compelling ‘winning logic’ that everybody from the C-suite to the front line understands and can explain.

The Stick Model of Value is a useful framework for telling your story. Will we win by creating more Value & thereby increasing the customer’s Willing to Pay? Or by continuously reducing our cost by engaging all team members in waste reduction, so that we sell more? Or permutations thereof?

A high-end recreational vehicle supplier I know has defined their winning logic as follows: ‘Speed – Cost – Innovation: 1) We’ll be faster at design & deployment than our low-cost offshore competitors by…, 2) We’ll reduce of cost of labor through Lean/OpEx methods to less than 20% of total cost so that it’s irrelevant, and 3) We’ll have the best Tech & innovation in our industry by…’

Result? On familiarizing himself with the books, the new CFO said to me, “This place is a cash machine.’  The company also has a rich sense of where they come from & a history of decency & fair play. As a result, people stay, get better & better at their work, and contribute. Win-win.

Last thing, can you outsource all this to AI?

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

Stratex Fundamentals – What Drives Achievement?

What drives StratEx achievement & how do we sustain it? Do the StratEx lessons I learned as a young Toyota engineer & manager still apply?

 What's in it for them?

I grew up in the ‘90’s on a steady diet of the Toyota Production System (TPS). Our compass through almost continuous expansion was a business system called ‘Hoshin Kanri’ or Strategy Deployment, which I’ve written about it extensively. The past decade my practice has evolved toward ‘ambidexterity’ and fields like financial services, consumer goods & Tech. My hypothesis: those will prosper who can both protect the core business with OpEx and ignite new growth with Digital methods.

So, do the TPS methods & mindsets I learned as a young engineer & manager apply? Yes, provided you translate & adapt them for each industry. (Does anybody care about how we did it at Toyota?) With that prologue, let’s see if we can answer the questions posed above.

What Drives Stratex Achievement?

Whether your focus is protecting the core business with Lean/OpEx, or igniting new Growth with digital methods, our motive force is smart, capable people continually solving problems (aka ‘Total Involvement’). This is the ‘wind that fills the sails’ and it has two parts: a) good people, and b) good systems that let them work with minimum hassle.

‘Good People’ entails answering the following questions:

·       What qualities do we need in our team members? How do we hire for those qualities?

·       How do we develop their skills? (Subordinate questions: What are the needed skills, skills gaps, and with what methods do we close them?)

·       How do we reward them & recognize their achievements?

·       How do we sustain a physically & psychologically safe workplace?

·       How do we engage team members in continuous improvement and/or innovation work?

·       How do we motivate them to continually improve themselves and help us to improve & innovate?

Our People management system must answer these questions in simple, concrete terms.  For example, ‘engagement’ means doing things such as Quick & Easy Improvements, Root Cause Problem Solving, and Innovation Sprints that generate Value which the CFO recognizes.  Filling out surveys or attending Senior Leader talks, while helpful for info-gathering, is not engagement.

‘Good systems’ means daily team huddles around team boards, a standard operating rhythm & huddle process at each level. It means a senior leader Obeya (Big Room, Control Tower, Cockpit) wherein the senior team addresses the big questions in a frank robust & visual way: What Should Be Happening?  What is Actually Happening? What are We Doing About It?  For leaders, what you do it what you get.

‘Good systems’ also means identifying & addressing blockers that hinder total involvement. These typically include bureaucracy, too many meetings, corrosive mental models (e.g. rewarding ‘busyness’ vs effectiveness), and perverse incentives.

How Do We Sustain Team Member Involvement?

We have to answer a difficult question: ‘What’s in it for you?’

Leaders need to explain why team members should go the extra mile & try to improve the current condition.  Does an answer like, ‘Because you need a paycheck’, instill passion & commitment?

Each leader has to reflect & answer this question in a heartfelt way.  Here the response of a leader I’ve been privileged to work with: ‘We want to win and be the best in our industry. We want to have fun & make money, and do right by our customers, team members & community. We want to invest in you & give you growth opportunities so you can help us to be the best. You’re going to learn leading edge methods, and you’ll have a job with us for as long you want one.  Your job may change, because we intend to keep improving. In return, you have to help us to improve, you have to be open & curious & energetic, and you have to tell us if something is not working and help us fix it.”

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