#34 Harnessing Digital Disruption with Pascal Dennis and Laurent Simon - part 1 of 2.





Proudly brought to you in association with S A Partners, a world-leading business transformation consultancy.


Introduction

Welcome to episode 34, the first in a two-part series of the Enterprise Excellence Podcast. It is such a pleasure to have Pascal Dennis and Laurent Simon with us today. Pascal and Laurent co-author the new book "Harnessing Digital Disruption, how companies win with Design Thinking, Agile and Lean Startup". This book is timely, considering these uncertain times and the rapid digital and virtual advancements we are experiencing.


I am looking forward to this conversation. Let's get into the episode. Pascal and Laurent, thank you so much for joining us today.


Summary


How did the relationship begin?


Pascal was enjoying a cocktail with his wife in his backyard in Toronto and received an international call. He quickly checked the number and looked up Laurent's profile. He thought, "yes, he's an interesting guy", and followed up with him. Laurent, currently in Singapore, has been a fan of Pascal for a long time, enjoying his lean and strategy execution books. Regular calls and catchups began. Initially, they focussed on digital transformation in the financial services world. Eventually, they decided to meet up in person and agreed upon South Africa. Long walks continued, and the two developed simpatico - a shared mindset. The ideas were so rich that Pascal had several pages of mindmaps after the meetings. These ideas were boiled down and inspired their book.


Pascal grew up as an engineer and manager in the Toyota Production System in the 1990's and found the ideas of the TPS to be immensely useful, but that needed to be translated for a digital world. With his experience in digital and financial pathways, data, drones, AI, and 3D printing, Laurent sensitised Pascal to the possibility of futuristic business inventions.


Laurent speaks about the new players in the financial world - FinTech or InsurTech who are addressing pockets of the value chain. Lending, for example, is offered in a much easier and transparent way. Similarly, for cross border payments, TransferWise has become hugely popular for individuals or businesses. Blockchain typically is reinventing the way people are importing and exporting money but is requiring a massive shift in the employee ecosystem.


It was evident to Pascal that the lean foundation of his background was not going to cope with the acceleration of technological change. An organisation risks becoming obsolete very quickly without transforming into a digital world. He speaks about the new digital innovators entering the world with financial backing, challenging traditional markets.


Laurent, working in Singapore, felt like he was working in the future. He was very keen to share the learnings of his company and their results.



Boy, haven't we seen a massive change in this area in recent time? The world has gone to a whole new level of digital. Some companies are positioned so well for this, such as Amazon. Others are not in such a strong position. Pascal and Laurent seem to have predicted the future with their book. So what is it about?


"Harnessing digital disruption" is set in Singapore. It is about a big company in big trouble trying to prevent obsolescence. It's a realistic story, describing the reality of change in difficult times. As gathered from survey results, the blockers to change and then their solutions feature in each chapter.


The Digital Innovation Tree


Two strategic objectives (fruits) represent the top of the digital innovation tree.

  1. Low hanging fruit - core business, process innovation, lean digital journeys, enablers.

  2. Fruit at the top of the tree - igniting new growth, product innovation, new ventures, new digital offerings.


For example, in banking, the core business is looking to onboard clients more quickly through technology. Rather than the client signing many papers, their smart contract fields are already filled in a digital setting. They simply confirm, then move on. Igniting new growth in banking would be establishing a commercial pilot and offering a new way to address needs. For example, the cross border payment system we spoke about earlier.


In a manufacturing industry, the example is heavy farm machinery. Protecting core business would be finding the top ten customer journeys, eliminating the waste and hassle from the process, and identifying where automation and tech can help foster communication between farmers and customers. Igniting new growth would be developing a new digital platform, inviting the farmers and developers to a joint conversation. The developers would extract the data generated by the farming equipment. The farmers would have beneficial, detailed information about the soil and crop and reduction of maintenance costs.


The tree's soil represents the foundation, business culture: mindsets of our people, leadership behaviour, digital strategy and literacy, agile ability, transparency, decision making based upon data.


The tree trunk represents current capability - good people trained appropriately, solid work systems, management mindset, and external collaboration.


The irony is that we often want to leap to the top of the tree for the fruit, right? We forget that we need to cultivate and nurture the soil beforehand to grow a strong tree and enjoy the delicious fruits of our labour. There is no silver bullet to the top of the tree.


De-risking your transformation journey.


So how do excellence and innovation happen?


Pascal and Lauren take us to the three swimlanes that will de-risk your transformation journey.

Level 101 - the foundation, or soil - a Leadership Development Program

Level 202 - the trunk - network of pragmatic innovators, fostering radical innovation.

Level 303 - fruits - delivering results fast - new capability from levels 101 and 202 is applied effectively through innovation projects and focused interventions.


Swimlane 1





Leadership is the starting point. Leaders should be able to define, deploy, execute and manage the digital strategy.


Underpinning this is that leaders have to understand what technology can do for their business, using real-life use cases and leading practices. They need to build their digital literacy. Pascal mentions running a hackathon - partner with hackers, coders, designers, business people and ecosystem.

Secondly, leaders need to develop a practical understanding of the core methodologies of design thinking, agile etc. Pascal and Laurent offer executive coaching to help.


Thirdly, understanding the digital vulnerabilities (disruptions) and defining the aspiration and winning logic in a compelling way.


From this comes a balanced portfolio of initiatives.


Transformation Lighthouse



A transformation lighthouse is then created, which is the pulsing heart of the transformation. In the lighthouse, leaders set a regular cadence, looking at the status of the pipeline of the innovation. They surface problems quickly, apply skills like innovation accounting to cull losing ideas and identify and invest in winning ideas. The management system encourages the right mindsets.



A regular rhythm of communication is vital in sustaining the innovation journey. Regular, visual, team meetings are required on all levels - frontline, tiers 2 and 3, which link to the executive lighthouse. Goals, initiatives and roadblocks feature on the lighthouse walls. Targets are identified and tracked. Where abnormalities occur, they are fixed. When management is enabled in this way, it can operate as a value-creating machine, ready to pivot and adjust where needed.


Laurent talks about fighting and winning four battles:

  1. Ignorance - people don't know what is happening.

  2. Guesswork - unsound decisions without using data.

  3. Fear - uncertainty and being uncomfortable with surfacing problems.

  4. Diffusion of effort - the cockpit of the transformation - everybody focuses on the targets, management intervenes against roadblocks and supports the journey.


Laurent also speaks about permafrost in middle management. This is a situation which occurs in many organisations. It is a situation where information slows down or is lost through middle management. Information from the front line does not effectively get to senior leadership if needed and likewise information from senior leadership does not effectively and quickly get to the front line. Many factors cause permafrost, all typicaly fall under either cultural or system issues. An organisation may not have a communication system setup that allows information to flow up and down an organisation quickly and effectively. Cultural aspects such as a lack of trust, fear and politics can lead to permafrost. The key is to understand what is the root cause of permafrost if your organisation is experiencing this and then taking the right steps to improve.



Coaching for the leaders and helping them understand where their people are at is vital. A large part of Laurent and Pascal's work is with coaching leaders, helping them with a visual chessboard, seeing patterns and drivers and making good moves. Tools like root cause, visual management, digital literacy, and the use of humour. Serious peole need cheering! Laurent shares a funny Lemmings cartoon at the conclusion of the interview, and humour flows throughout this interview.


To conclude, Lauren speaks about a recent insight: having agility in your own life. For six years, Laurent was based in Singapore. In March 2020, Lauren and his wife travelled to New Zealand for a hiking holiday. COVID broke out, and they were isolated in New Zealand. When the international borders were opened, they decided to remain in New Zealand—turning a constraint into an opportunity in real life.


In the next episode with Pascal and Lauren, we will explore swimlanes 2 and 3. We are very much looking forward to that. Many thanks for the time and knowledge Pascal and Laurent.


Quotes


07:07min So, on the one hand, you've got small players who are eating the lunch of the bank and the insurers. And on the other hand, you've got the big platform company like Google, Amazon etc. who are also entering gradually, in some pockets of financial services, specifically in the retail world.


07:54min The lean foundation was necessary, but it was not sufficient. That the rate of technological change was such that you could not rest on your laurels. So, I was very proud of my experience at Toyota and all the great senseis, but it wasn't enough.


11:18min So, how do we have the people at the top of the pyramid clearly understand what tech can do for their business. How do we help them frame constraints into opportunities? A typical example is open banking: Singapore is well ahead in that front.


13:49min so it's about a big company in trouble trying to prevent obsolescence, trying to reinvent itself, using technology, trying to re-energise the culture, trying to rebuild the skills, trying to overcome the fear, the diffusion of effort that you get in crisis, and all of the other blockers.


29:14 min Fundamentally, the trunk ultimately means developing a network of people who have the necessary skills, have the necessary mindset and a robust process through which they can innovate.

30:45 min The Venn diagram captures the need to organise around a shared logic and shared language. People who are coming from the business part of the world, people who are coming from the design part of the world, and people who are coming from the coding and development part of the world. And this model is called the 3H model. We bring together hipsters; the designers, hackers; the coders, and hustlers; the people from the business, with the customer at the centre.


33:25 min Leadership is the enzyme that makes this chemical reaction go forwards. In the absence of capable leadership, it's very, very difficult to sustain this type of a transformation, so we focus there.


37:25 min and the content of these meetings is what's the target, what's actual, what are the abnormalities, what's the root cause, let's fix them. If we can't fix them, we ask for help. So you have real-time problem solving around a shared aspiration and a shared winning logic.



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