Kaizen is Necessary But Not Sufficient

 

‘There are more things in Nature, Horatio, than are dreamt of in your philosophy.’ Hamlet

As a Toyota acolyte, I was focused on the factory. How could I not be? New factories & model launches, new processes & equipment, continuous problem solving in a splendid team environment. I experienced world-class management & leadership. A Toyota logo is forever emblazoned on my heart.

But I began to realize there were large gaps in my understanding. If TPS was enough, why were the Tech tigers so much more valuable than the great Industrials? And so, I went to Singapore seeking a sensei.

Finding the Blue Ocean

I found my Innovation sensei in Laurent Simon, my friend, co-author & East Asia Innovation leader. Under Laurent’s guidance I participated in Innovation sprints in a range of industries (Financial Services, Consumer Goods). We were trying to create something seemingly out of nothing – ‘Abracadabra’ Innovation. Twenty-five years after my Toyota apprenticeship began, I found myself on a new learning curve, one just as steep & just as exhilarating.

Kaizen entails making continuous incremental improvements to existing offerings & processes and can achieve seemingly magical outcomes not unlike those of compound interest. My Sprint colleagues & I were seeking the proverbial ‘Blue Ocean’, a place where nobody else was fishing – a very different challenge, though no less profound.

I Thought I Understood the Customer

At our great Toyota factory, we thought we understood our customer, and so we did – to a point. We understood the customer’s wide range of satisfiers & dissatisfiers. We set both process & outcome targets for critical items like water leaks, engine surges & stalls, squeaks & rattles and dozens more. We focused kaizen activity on hot spots, kept improving and repeatedly won the coveted JD Power Gold Plant Quality award (still a point of great pride).

But here’s the rub: Could my Toyota colleagues & I have imagined that the automobile would evolve into a ‘smartphone on wheels’ or a ‘living space’ designed for comfort & productivity?  Could we have imagined parallel developments like the Smartphone or AI?

Kaizen is necessary but not sufficient. Abracadabra Innovation entails creating something new & useful seemingly out of nothing. We were often in the dark regarding core innovation questions like:

1.     Who is the customer?

2.     What do they value?

3.     Why do they buy or not buy?

We had to create our own data by running quick, cheap experiments. We had to learn our way up the proverbial innovation curve.

Abracadabra Innovation is a Process

What have I learned about innovation?

It’s a process through which you gradually engage a prospective customer.  Process steps typically comprise some version of:

·       I Know, I Like, I Trust; I’ll Try, I’ll Buy, I’ll Buy Again, and if you’re lucky,

·       This is great, I told all my friends!

This so-called ‘customer funnel’ has three phases:

·       Awareness – (Who are these jokers?),

·       Bridge – (Hmm, I should check them out), and

·       Clubhouse – (I’m a fan)

The innovator’s job is to pull people from Left to Right, and into the Clubhouse. Like any process, this one has bottlenecks. As Eli Goldratt taught us decades ago in ‘The Goal,’ our job is to 1) Identify the bottleneck(s), 2) Understand the blockers underlying each bottleneck, 3) Remove the bottlenecks, and 4) Keep going till everything flows.

To create ‘flow’ we have to a) develop hypotheses around the core innovation questions, b) run quick, cheap experiments, c) thereby generate sound data, and d) continually adjust our offering based on what we’ve learned, without going broke.  

Experimentation has a bright future! More to come.

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