Notes on Barry O’Reilly’s Lean Enterprise

(From his talk at GOTO 2016, posted 9/7/16, link here)

Orgs need to re-embrace learning to keep up with the times

  • Only 29% of Fortune 500 companies plan to grow their business via new products and services (49% expect to grow via cost reductions instead!)
  • Only 13% of US workers report being highly engaged at work: most workers feel disempowered and disengaged
  • There’s a delivery gap in good customer experience—80% of companies believe they are delivering good customer experiences while only 8% of customers agree

To close this gap, “I experiment, therefore I learn”

EXPLORE

Develop a scientific, data-driven paradigm for business model, innovation, product development and customer engagement

Stop writing, start learning

Gather cross-functional execs together to create a business model canvases

  • What are the challenges that we need to address?
  • How can our ideas work?
  • How would this work in the context of the business?
  • How can we learn more about this context together?

Next, the execs to start forming hypotheses

  • Rather than writing business requirements, write user problems within the framework of hypotheses
  • What do you want to test? Learn?
  • How do you collaborate and quickly build something that can create an experimental loop to start providing hypothesis validation data?

Stop talking, start testing

Get the execs OOTB and into testing situations with actual customers and prototypes. This will really help widen the execs’ perspectives by seeing customers’ mental models and interactions

  • Document what’s working and what’s not and immediately share across the org
  • Keep the iteration cycle going! Keep the learning coming!
  • Based on what we’re learning, what are we going to do differently to address new knowledge

Made it transparent

Publicly share what’s working and what’s not

Pass out idea cards to team members to capture ideas—even at any random time—about how to improve the product, the process, the company or the people. Post them to a public space, regularly going through them together as a group and prioritizing one or two

People see things happening and start getting energized

Keep the team space transparent by sharing:

  • Aspirational vision
  • Customer hypotheses
  • Design experiments
  • Story maps
  • Data/feedback to validate and measure success

Change the system

People need to feel engaged and happy to be highly productive. Org culture must change to make this possible

Co-create the new culture with the entire team focused around customer testing and learning

Use the future-backwards method for mapping direction of where you want to go

  • Plot out a trajectory for all the best things that could happen over the next 12-18 months
  • Below that, plot out all the worst things that could happen for that same period
  • By looking at extremes, you widen perspectives
  • Now do the same process outside-in—that is, plot trajectories from a customer’s perspective

Follow the Toyota Kata method

Use value stream mapping to assess the current condition

  • Used to investigate end to end flow, cycle time and opportunities to improve
  • Process steps and the people involved in each step are recorded, as well as key metrics such as processing time, elapsed time and percentage accurate and complete
  • Map it out with a cross-functional team and post its, specifically documenting the enablers and obstacles

5 Kata Questions

  1. What is your target condition?
  2. What is your current condition?
  3. What obstacles are preventing you from reach the target condition? Which one are you addressing now?
  4. What is your next step/experiment? What do you expect to come from it?
  5. How quickly can we see what we have learned from that step?

Now get agreement on what your next target condition looks like—an important business goal or customer outcome

  • The target condition should NOT be clearly achievable—or else, why haven’t you already achieved that target?
  • Target goals should be aspirational stretch goals
  • This forces the org to look beyond of the existing knowledge/experience threshold to experiment with something new
  • What is the experience that will blow your customers away? Don’t worry about how to achieve it, just start to define what it could look like
  • Now focus on your system of work—how work actually gets done. (You are not judging individual performance here!) Document the current process steps and outcomes

Now, have the group start to design some experiments to find out ways to improve your system of work.

  • Socialize current findings and your vision for where you want to go
  • Get feedback—have we captured a valuable vision? What have we missed? Come and collaborate with us to make it better
  • Start writing hypotheses: We believe <this capability> will result in <this outcome>. We will have confidence to proceed when <we see a measurable signal>
  • Remember to keep the goals SMART
  • Now have everyone generate ideas for how to achieve these goals. Write them on post-its and put them up
  • Now separate ideas into Now-Next-Later groups
  • For the experiments: limit the investment, set clear boundaries, create small, fast feedback loops that actually do allow ideas to fail without repercussions
  • Based on learnings, decide to continue on, stop entirely or pivot for the next experiment
  • Based on learnings, identify new obstacles
  • Share learnings across the org

TRANSFORM

The drive for transformation usually comes from the top but it’s actually implemented at the bottom:

screen-shot-2017-02-05-at-4-58-53-pm

Leaders must go and see where the work is happening

  • Humble enquiry to build trust and relationships
  • Scale leadership, autonomy and reduce cognitive load with the 5 Questions
  • Create action plans based on learnings from talking with real customers

CONCLUSION

A single, time-boxed plan for “transformation” isn’t the answer.

Continuous transformation is the answer.

10 Principles to Transform

  1. THINK BIG. Learn fast. Start now!
  2. Executive mandate, sponsorship and support
  3. Right people, right place
  4. Act our way to a new culture
  5. Build the right thing, then build it the right way
  6. Small, fast, frequent delivery to build momentum
  7. Create feedback loop with customers
  8. Adapt our approach based on validated learning
  9. Demonstrable evidence for future investment decisions
  10. Scale out learning cross the chasm

About Barry (from his website): Barry O’Reilly works with leading global organizations on continuous improvement using lean and agile practices and principles. He has been an entrepreneur, employee and consultant. After several startups, his focus shifted towards larger enterprises where he has explored the intersection of business model innovation, product development, organizational design and culture transformation. 

He is a co-author of Lean Enterprise: How High Performance Organization Innovate At Scale, the latest addition to the Eric Ries Lean Serieswith O’Reilly Media, 2015, and a Harvard Business Review must read for would-be CEO’s. He is an internationally sought after speaker and frequent writer for The Economist.

Barry is Founder and CEO of ExecCamp, the entrepreneurial experience for executives, and Antennae it’s mission to help technology led businesses innovate at scale.

 

 

 

 

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