Strategy Deployment as a Four Testable Hypotheses (Part 2: Execution and Capacity)

TL;DR: In Part 2 of this series, I explore two hypotheses that often derail strategy deployment in practice: deciding which initiatives truly matter and understanding the organization's real capacity for change. Treating focus and capacity as testable hypotheses–rather than fixed assumptions–helps leaders limit overburden, execute better, and turn strategy into a learning system.

In Part 1, I described strategy deployment as a series of hypotheses leaders test over time.

This post focuses on the hypotheses that most often break down in practice: deciding what to work on–and how much the organization can realistically handle.

The first two hypotheses from Part 1 were:

Hypothesis #1: If we focus our improvement efforts on these four areas and close performance gaps within them, then we will perform well as an organization–both this year and over the long term.

and

Hypothesis #2: If we improve performance in these few key indicators, then we will make meaningful progress toward our true-north objectives–and overall organizational success.

So far, leaders have made predictions about direction and measurement. The next challenge is deciding what to do–and how much is feasible.

We need to decide what actions to take.

Hypothesis #3: Focused Initiatives Drive Strategic Progress

Dr. John Toussaint often describes visiting organizations with hundreds of so-called “top priority” projects. Karen Martin writes about the need for “focus” in her book The Outstanding Organization and we worked together to try to introduce SD to a health system that had that same problem: hundreds of planned events and initiatives–none of which ever really got done. Each became a distraction or an excuse for why something else didn't move.

In Part 1, I wrote about ThedaCare and its SD walls in its senior leadership team room. ThedaCare has another wall in their SLT room (their “visual room,” as they call it), where they display their “breakthrough A3s” – there is an A3 that represents that work that's being done that year to improve each focus metric. Toussaint and Dr. Dean Gruner (the current CEO) call this limited number of A3s the “must do, can't fail” key initiatives.

Karen and I led a team of executives in culling through and really prioritizing their “top initiatives.” The “focus initiatives” really have to have focus, just as “focus metrics” need to have focus. We got organization down to the 30 top initiatives… after trying to get them to 20. It was really difficult for everybody because people really resisted de-prioritizing things.

People sort of cling to their top initiatives like Steve Martin in “The Jerk” clinging to his stuff:

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I mean this in good fun… I don't need any of these projects… well except these… and that paddle ball game…

Hypothesis #3: If we execute and complete a small number of truly top-priority initiatives, then we will make the greatest progress toward closing performance gaps and advancing strategy.

Focus means not letting your top 300 projects distract you from getting those first 20 truly top priority projects done. That excuse of “We didn't do X because we were doing Y” has to go away. Not everything gets to be a top priority. If everything is a top priority, then nothing is.

These top 20 (or so) initiatives are managed by A3s that are kept on the SD wall. Each one is managed using an A3 to make sure there is good process improvement discipline. If something is just a “pet project” (or jumping to a solution), the A3 process allows us to test to make sure we're really solving a problem and that we're proposing countermeasures that are expected to help solve a problem or bring an opportunity to fruition. Each A3, in that sense, contains its own hypothesis: If we try these countermeasures, we expect this result.

These top initiatives are the ones reviewed by management on a regular basis (bi-weekly or monthly). They are the ones that the executives keep an eye on… asking: How is the A3 progressing? What help do you need? What barriers should leadership remove?

If these are truly the top priority initiatives, the executives (and the next layer of management) play “catch ball” to make sure things are moving along… de-prioritizing other work as needed and making sure individuals or departments aren't penalized for helping the organization stick to its key priorities.

When one of those top initiatives actually gets completed (and it's more likely that complete something when you focus), then you can start another. It's sort of a corporate “Personal Kanban” approach where you limit the amount of WIP that you're working on.

Now, it's not that those 20 initiatives are the ONLY things people can be working on. Of course not. People can work on other lower-priority initiatives, as long as that work does not distract the organization or pull resources away from the top priority stuff. And, the executives won't be reviewing the progress on that other work the way they will with the very top SD initiatives.

So, we have our direction (Hypothesis #1), our goals and measures (Hypothesis #2), and our selected initiatives (Hypothesis #3).

Hypothesis #4: Organizational Capacity Is Limited–and Learnable

Our final hypothesis is about capacity. How do leaders know when the organization has taken on too much?

Hypothesis #4: The organization has the capacity to complete this many priorities within the timeframe–and with the quality we expect.

An organization might bite off more than it can chew. They might go from 250 “top” priorities to just 50… and still learn that they're not focused enough. This is where PDSA becomes real. The “Adjust” may mean reducing 50 priorities to 25–and admitting the original assumption was wrong.

Our organizational capacity might depend on what these top initiatives entail. Capacity here isn't going to be as simple as a single number.

We might err on the side of caution. If we're getting a bunch of top priorities done, maybe we can take on more. But it seems people usually err on the side of thinking they can take on too much.

We go through these cycles over time as executives and an organization. We learn and get better through these cycles. We set an example, through our practice of Strategy Deployment, for the rest of the organization about how to manage A3s and PDSA problem solving.

When leaders treat these as hypotheses rather than commitments, they create room for learning instead of blame.

Taken together, these four hypotheses turn strategy deployment from a planning ritual into a learning system… one that helps leaders test assumptions, limit overburden, and improve results over time.

How does this line up with your practice of SD? Leave a comment below…

Also, see this webinar that I did in July 2016 on Strategy Deployment.

“Everything You Need to Know About Strategy Deployment” – KaiNexus Lean Webinar

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Executive Summary: Strategy Deployment as Four Testable Hypotheses

Strategy deployment works best when leaders treat it as a learning system, not a fixed plan. At its core, it consists of four testable hypotheses that are revisited and refined over time:

1. True North Hypothesis
   If we focus our improvement efforts on a small set of true-north priorities (such as safety, quality, people, and financial stewardship), then we will perform well as an organization over time.
2. Focus Metrics Hypothesis
   If we track and improve a limited number of key performance indicators tied to those priorities, then we will make meaningful progress toward our strategic goals.
3. Focused Initiatives Hypothesis
   If we execute and complete a small number of truly top-priority initiatives, then we will make the greatest progress toward closing performance gaps and advancing strategy.
4. Capacity Hypothesis
   If we limit strategic work to what the organization can realistically handle, then we can execute with better quality, less overburden, and more sustainable results.

When leaders treat each of these as hypotheses–using PDSA thinking to study results and adjust over time–strategy deployment becomes an ongoing practice of learning, focus, and respect for people.

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If you’re working to build a culture where people feel safe to speak up, solve problems, and improve every day, I’d be glad to help. Let’s talk about how to strengthen Psychological Safety and Continuous Improvement in your organization.