We operate in a highly unpredictable environment.  The increasing interest and practice of Lean and Agile methodologies is a clear acknowledgement of the unknowns and unknowables.  Unable to predict the future with high confidence, we have to learn and adapt as we go. 

How can individuals and organizations be more effective in dealing with this new reality?

In project management, multi-generational project planning is used to transform a large project into a series of smaller ones, each achieving a significant milestone relatively quickly.  In addition, the lessons learned and knowledge acquired in each stage refine the goal and reduce the uncertainty in the subsequent planning and execution. 

This is an example of analytical thinking — a critical competency of the project manager — which includes

1. Breaking down a large, complex problem into smaller, manageable components
2. Prioritizing the components based on a set of criteria, such as risk, effort, impact, and interdependency
3. Sequencing the efforts in such a way that minimizes risk and cost while maximizing the desired outcome

In today’s work, analytical thinking is not just a required competency of project managers but any knowledge worker who has to solve technical or business problems.  I use it as an essential criterion for evaluation of job candidates and development of employees.

Fortunately, everyone can improve their analytical thinking at work through continued learning and practice of some well-established conceptual frameworks and scientific methods, for example

1. Product development using Design of Experiments (DOE) 

Frequently, there are numerous variables that we need to understand in order to design a product or process or improve its performance.  When a one-factor-at-a-time or a full factorial design is not most effective, a screening design can be used first to identify the critical few among many potential factors.  Then less resources are required to study the few more thoroughly, e.g. characterizing their interactions and the Response Surface, to achieve optimal outcomes.  When designed strategically, each study augments the previous ones, avoiding unnecessary repeats.

2. Quality improvement by understanding variation

Reducing defects and improving customer satisfaction is a main goal of quality.  Unfortunately, in many organizations, quality issues persist despite repeated improvement efforts.  While subject matter expertise is important, sustained improvement requires understanding of process stability (i.e. lack of special cause variation) and capability (i.e. probability of the process producing a result that meets customer requirements).  That is why process improvement methodologies, such as Six Sigma, rely on the principle of Statistical Process Control (SPC) to identify and separate special cause variation from common cause variation.  Only after eliminating special cause variation, can we truly characterize and improve the process.  Then, if necessary, we can improve process capability by reducing common cause variation and/or re-centering the process to the desired target.

3. Lead time reduction using Lean concepts

The ability to consistently design and deliver a product or service faster than competition is critical to business success.   The lead time (e.g. request-to-delivery time) of many business processes remains long and variable. These processes often involve numerous and convoluted steps across multiple functions.  It is impractical and unnecessary to analyze and improve all steps. Seeing from a customer’s perspective, Lean thinking brings us clarity by separating value-added from non-value added activities (i.e. waste) that impede the continuous flow of value to the customer.   By reducing or abolishing waste, such as waiting, overproduction, and inventory, we can simplify and speed up the processes without investing in new capacity.

These are but a few examples in which proven scientific and management methods help break down complex problems into manageable components that lead to effective solutions. 

Buzzwords like “work smart,” “be agile,” and “fail fast” may create the initial awareness or inspiration.  But they rarely lead to operational effectiveness or material change.  Building an organization that is Lean, Agile, responsive, or adaptive is transformative and requires systematic identification and development of required competencies, such as analytical thinking.

Adapting to a changing world is a challenge that demands analytical thinking as well.   I am optimistic that individuals and organizations will continue to develop new competencies by embracing sound problem-solving methodologies.

There seems to be much confusion between strategies and goals.  Many strategies only state the desired outcomes without either 1) a meaningful connection to the organization’s unique ability to execute or 2) tough choices made based on critical analysis of risk-reward tradeoffs.  I call them wishful thinking because they are disconnected with the organization’s reality. No wonder many strategies and change initiatives fail.  A November 2017 Harvard Business Review article “Many Strategies Fail Because They’re Not Actually Strategies” touches the same point. When strategies fail in execution, just ask the employees and middle managers why.  The failure rarely was a surprise to them.

Some people believe that strategy and its implementation or execution are separate, i.e. after the strategy is defined, implementation can be developed accordingly.  I don’t.

The iterative nature of business strategy notwithstanding, the actual work of strategy implementation does follow the strategy formulation step. However, the strategy implementation framework should be part of a strategy when formulated.  

What I have observed as an employee and as a consultant is that strategies are often formulated behind closed doors in conference rooms and then announced to the organization.  The decision makers are so removed from the organization’s reality that employees scratch their heads wondering what the strategy means and where it came from.  No amount of corporate communication or change management could have saved it.

The problem is not necessarily the strategy formulation process, but the information used to create the strategy.  For example, the traditional SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is a powerful tool.  But without an instinctive understanding tied to reality, it is only a paper exercise that makes pretty Powerpoint slides.

How can we improve strategies so they are more likely to succeed?  One thing I recommend is that leaders “Go Gemba” in a Lean term, or simply “go out and see for yourself.”

In a typical organization, frontline employees and middle managers know what is going on in the business better than anyone else. However, only a fraction of this knowledge reaches to the executive level, and sometimes inaccurately.

The danger of not being in touch with the reality is clear.  In his book Only the Paranoid Survive, Silicon Valley legend Andrew Grove shared his lessons learned from Intel’s 1994 Pentium crisis – a tiny flaw in the chip that cost them nearly half a billion dollars in less than six weeks.  He described the difficulty of senior leaders in getting the right information from the organization:

“They [middle managers] usually don’t have an easy time explaining it to senior management, so the senior management in a company is sometimes late to realize the world is changing on them – and the leader is often the last of all to know.”

He further advised:

“The lesson is, we all need to expose ourselves to the winds of change.  We need to expose ourselves to our customers, both ones who are staying with us as well as those that we may lose by sticking to the past. We need to expose ourselves to lower-level employees, who, when encouraged, will tell us a lot that we need to know. … As we throw ourselves into raw action, our senses and instincts will rapidly be honed again.”

Go Gemba if you don’t want to be the leader that is the last to know.  

Who doesn’t? But how?

For over a decade, I have used many management methodologies for business improvement, e.g. Lean, Six Sigma, Enterprise Process Management, Change Management, etc. One of the biggest lessons I learned is that no matter what methodologies we use, ultimately, sustainable improvement is built on one foundation: understand, develop, and enable people.

Anytime when the people component is lacking in a change initiative or operating model, it will inevitably fail.

It is not a new concept, and no one seems to disagree with the premise. Yet few put enough emphasis on people in everyday practice. The people and culture piece often gets the least amount of attention on a Balanced Scorecard — if it is used at all. Businesses need to achieve financial goals, satisfy customers, and improve capabilities. No doubt. Guess who make these happen: it’s their people.

Many organizations start to pay attention to people only after they begin a change initiative or when there is an attrition problem. Even then the task is often delegated to Human Resources or other specialists, and the resources disappear as soon as the initiative officially ends or when the symptom is gone.

But change is constant. The need to develop and enable people never ends, and it is the professional responsibility of the managers.

Nowadays, every organization tries to be agile and embrace change, including digital transformation. But are their people willing, prepared, and ready? The outcome is predictable: those who succeed have nurtured the right culture and people from the start.

People familiar with the Lean concepts know the seven types of waste and the benefits of relentless elimination of such waste. Lean practitioners are trained to see them in everyday activities and act on them. There is the eighth type – unused human potential, which is the biggest but least visible or recognized waste. Reducing or eliminating this type of waste is not the responsibility of a process improvement or HR specialist but management. Unfortunately, many managers (if not the majority of) do not proactively develop and enable their people. They are only trained or expected to handle performance issues when things go wrong.

Not realizing people’s creative and productive potential is a huge missed opportunity for both the organization and employees. But it doesn’t have to be.

I encourage every manager to ask one question:
What have I done today to develop my people or improve the environment to enable them to accomplish more? How about in the last week, in the last month?

I want to leave you with one of my favorite quotes from Peter Drucker.

Entrepreneurs innovate. Innovation is the specific instruments of entrepreneurship. It is the act that endows resources with a new capacity to create wealth. Innovation, indeed, creates resources. There is no such thing as a “resource” until man finds a use for something in nature and thus endows it with economic value. Until then, every plant is a weed and every mineral just another rock.