Synopsis: It can often seem like digital technology is making every aspect of business move at warp speed: getting to market faster, capturing value quicker, more immediate responsiveness to customer needs. But doesn’t high speed carry the inherent risk of loss of control? Not necessarily. Continuous deployment can be both cheaper and lower risk. It’s cheaper because of automation and because small development teams need less coordination and oversight. And the risk can be managed through a new tool called “feature gates.”
Examples: Google builds an automated test engine and uses peer reviews of new code to control risk yet deliver new software continuously. HubSpot organizes its developers around small services and uses “feature gates” to control release of changes to test groups and then the market.
Question: How can you speed up product development and control risk?
Synopsis: The rapid pace of change in software (e.g., new product releases every day, not every year), has caused an increasing pressure on product development in other areas, and on management in general, to change more continuously as well. Indeed, software is emerging as the proving ground for the future of management practices, the way auto manufacturing used to be the proving ground for new management practices (think of the Toyota Production System).
Example: Amazon will release a change to its ordering system about once every 11 seconds, adding up to about 8,000 changes per day. In the time it takes Staples to make one new release, Amazon has made 300,000 changes. Amazon has a radically different and better operating model that will crush any competitors who are making one change in nine weeks, while it is making changes every eleven seconds.
Question: Can you make continuous changes to your products?
Synopsis: GE is constantly looking for new ways to get better and faster for their customers. That includes learning from the outside and striving to adopt certain start-up practices, with a focus on three key management processes: (1) resource allocation that nurtures future businesses, (2) faster-cycle product development, and (3) partnering with start-ups.
- GE incubated an energy storage company (“Durathon”), which has gone from the lab to a $100 million business in five years. It took the financial backing and technical support of GE and the support of CEO Jeff Immelt to nurture this business through numerous technical and business model changes.
- The Lean Startup approach is enabling GE to take “Agile” and “Lean” methods, which they had been using to improve operations, and apply them to starting businesses.
- GE has actively created several “ecosystems” with start-up networks, including Local Motors, Quirky, Kaggle, and GrabCAD.
Question: What are the key processes for keeping an organization young?
Synopsis: As the world becomes more digitized, generating more information surrounding products and services and speeding up processes, large and small companies in every industry, even manufacturing, are starting to compete more like the software industry, with short product lifecycles and rapid decision-making. GE has responded to this drive for speed and need to align more closely with customers’ needs by using a new technique called “FastWorks.”
Example: GE Appliance’s first attempt to apply FastWorks has been to create a refrigerator with French doors (doors that open from the middle) for their high end “Monogram” line. In January 2013, Chip Blankenship, CEO of GE Appliances issued a challenge to the newly formed team: “You’re going to change every part the customer sees. You won’t have a lot of money. There will be a very small team. There will be a working product in 3 months. And you will have a production product in 11 or 12 months.”
Question: Have you seen applications of Lean Startup practices?
Synopsis: Most decisions in organizations are made by escalating them up the management hierarchy — and it’s usually the highest paid person in the room’s opinion that prevails. But with the rise of digital technology, and with it the ability to get immediate feedback from customers and communities, crowdsourcing has become a powerful alternative for driving important decisions. It opens up and democratizes decisions, harvesting the accumulated thoughts and perspectives from your customers and across your organization.
Examples: IBM uses internal crowdfunding to choose which IT projects to develop, and uses utilization to decide which applications go into production. Valve Software lets people decide which projects they work on.
Question: Where could you replace managerial decisions with crowd decisions?
Synopsis: Organizations need more individual leaders who can help everyone navigate through the new, speeded-up and volatile world. Problem is, too many organizations approach this challenge with a one-size-fits-all idea of what change leaders should look like, and they train them accordingly.
In our research on change agents at the Phoenix Community of FCB Partners, we have found that there are three distinct challenges which require different kinds of change leaders: (1) transformational leaders, (2) innovation instigators, and (3) innovation managers.
1. Transformational Leader: Jose Luis Prado at Quaker inspires with metaphor.
2. Innovation Instigator: Paul Klein at Rich Foods is never satisfied.
3. Innovation Manager: Doug Drolett of Shell drives execution.
To develop managers, Google assesses competencies and then provides tailored development activities.
Netflix believes in developing people by giving them the opportunity to develop themselves, by surrounding them with stunning colleagues and giving them big challenges to work on.
Question: What kinds of change agents have you seen?
"Stop rearranging the deck chairs on the Titanic!"
When your boat is sinking you don’t focus on tidying up your ship. It’s all hands on deck to plug the hole or abandon ship to safe your life.
And in this PEX Week USA keynote address, researcher and consultant Brad Power, says this analogy is becoming all the more relevant for continuous improvement. The cause? Market pressures and fast-moving digital innovators turn the rules of established industries upside down. You need to know when to “tune the performance engine” and when it’s time to completely reinvent yourself.
Here’s why and what you need to think about..
(When you have 47 minutes)
In this interview with the PEX Network, Brad Power describes why he believes the world is shifting from continuous improvement and episodic innovation to a need for continuous innovation. Despite the need to devote more resources to disruptive innovation, In the internal competition for scarce resources in most large traditional companies, almost always today’s performance engine wins the lion’s share.
How do some leading organizations continuously innovate? How do their management systems protect money and people to generate, incubate, and commercialize disruptive innovations?
There is a transcript of the interview at http://www.processexcellencenetwork.com/innovation/articles/move-from-continuous-improvement-to-continuous-inn/
Synopsis: Instead of mapping workflow in detail with “boxes and arrows,” managers should focus on the “diamonds and arrows” of decision flows. In our transformed information economy, improving the decisions of knowledge workers can have a much higher impact on business performance than fixing daily workflow inefficiencies.
Example: Materials managers reoriented themselves from process details to business goals and operational performance by brainstorming a list of 47 decisions in 6 categories that they were responsible for, then prioritized and analyzed 12 decisions that were key to performance. They then focused on these critical 12 for immediate training, performance management, process improvement, and longer-term IT systems improvement. With this re-focusing, they improved the company’s operational and financial performance significantly over the next months.
Question: Have you seen examples where focusing on better decisions drove better outcomes than focusing on workflow improvement?
Synopsis: The uber challenge for process improvement in organizations has always been to make improvements across functions. In the absence of a significant disruptive event, or obvious proof that the world is changing, the gravitational forces in organizations pull strongly towards the performance engine: functional, hierarchical, command-and-control, rigid. Few organizations have assigned people to manage their major end-to-end processes — and been successful.
Example: A U.K. bank is making continuous improvement part of their standard work. It has gone well, but only at a functional level. Trying to get end-to-end improvements has proven to be virtually impossible.
Question: Have any sizable organizations assigned people to manage their major end-to-end processes — and kept them in place over the long term?