Host Intro (Gene Kim)

All right, Steve, come on out. So I'm so pleased that I'll be presenting with Dr. Steven Spear, my mentor for almost a decade. He has presented to this community many, many times. As you may know, he's famous for many things, but he's probably most famous for writing one of the most downloaded Harvard Business Review papers of all time. He wrote it in 1999, called "Decoding the DNA of the Toyota Production System." This was based, in part, on his doctoral dissertation that he did at the Harvard Business School, and in support of that work he worked on the plant floor of a tier-one Toyota supplier for six months.

It is remarkable that he's extended his work beyond just high-repetition manufacturing work to engine design at Pratt & Whitney, to the building of safety culture at Alcoa, to how we make self-safe healthcare systems. And he worked for over a decade with former CNO Admiral John Richardson, helping create a learning dynamic across all aspects of the enterprise.

We are here to talk about what we've been working on for two-plus years and all the amazing discoveries that we've made as we work towards getting a book out next year that attempts to describe a theory of organizations and coordination, both in the ideal and not ideal, to try to understand why organizations work the way they do, and trying to synthesize what is in common between DevOps, Agile, Toyota Production System, safety culture, and so much more. So with that, Steve, over to you.

Dr. Steven Spear

Hey, good morning, everybody. Before I get rolling on this, Gene and I are trying out some new material today, and we'd like your feedback. Throw it into the Slack channel. Here's the reason to do that. If you do not put comments into the Slack channel, when we finally publish what we're talking about today, you're gonna have to read the same crap again.

On the other hand, if you put some good comments in the Slack channel, when you get the book, you can turn to your colleagues and say, "Hey, Dana, I'm the one who bailed them out on that book." So anyway, lots of comments, please.

Now, in terms of the work we've been doing, we start with the basic question: why are there winners and why are there losers? Let me say it again. Why are there winners and why are there losers? We take for granted that there should be winners and losers, because so often there are winners and losers. But let me just say that we should actually be surprised by the winning and losing in commercial competition. Why? It's a level playing field, right? Everyone goes into a realm looking for opportunity. The opportunity is similar to whomever it happens to be. They draw upon similar resources to construct solutions. They're using similar delivery channels to deliver those solutions. Level playing field all across the board, and yet there are winners and there are losers.

So when you take away all the common resources, you have to find something uncommon to explain uncommon outcomes. What we think the answer is, is that the reason we get uncommon outcomes from common resources is that the winners are much better at harnessing the brains in their enterprise. What I mean more particularly about this is that when they have access to the collective intellectual horsepower distributed throughout their organization, they are way better at harnessing that through collective action towards common purpose than anybody else.

Here's how we're going to build our thesis. Gene is going to introduce an example. I'm going to throw in some color commentary and develop this into a model. And like I said, as we go along, your comments into the Slack channel, please, so next year you can say, "Hey, that book is good because of me." Gene, over to you.

Gene Kim

Thank you, Steve. I must say, this has been one of the most intellectually challenging things I've ever worked on, and also one of the most rewarding. But there are times when I think that I actually don't know anything. I want to explain something that you might have seen. I've been writing a series of blog posts, something that might be a little strange, but it's because I'm finally getting some clarity after working with Steve. This has been almost a decade. These aha moments came after Steve and I spent a week together in Boston.

The first essay I posted was about how even moving a couch is not just brawn work. It actually requires a lot of brain work. Let's suppose you have two people. Let's call them Steve and Gene. There's actually a ton of communication and coordination that is required as they move the couch. When they start, they're immediately in conversation, actively communicating and coordinating. Where do you put your hands? How do you keep the couch balanced? What do you do to move the couch through a door, sideways or lengthwise? How do you get downstairs?

Suppose this homeowner shows up and insists that Steve and Gene can no longer speak directly to each other. In fact, even certain actions should not be taken without first getting approval from the homeowner. Suddenly, very urgent messages like, "The couch is slipping; can we slow down?" or "The couch is pinching my finger in the doorway" are no longer making it through in time. Everything is getting worse. It takes longer, things are getting damaged around them, and it is even more dangerous as well. So I thought this had a whole bunch of, for me, profound insights.

The second essay was the extension of the scenario. It turns out that Steve and Gene are moving the couch because they're helping Miriam and Margaret paint the walls and ceilings of that room. They're moving their furniture out because they don't want to get paint all over the furniture. In the room now, with our two people moving the couch and two painters, and strewn across the room are open paint cans and four ladders. Now the work, the communication, and coordination required are substantially higher. People have to signal what they're trying to do, maybe ask people to get out of the way. Miriam and Margaret have to ask Steve and Gene to not move something. There are dependencies. We can even imagine a scenario where they deadlock and no one can actually do anything. This is where coordination dominates and no energy is spent on the value-creation activity of the task at hand.

What we've been working on for two months is the extension of the story. The story begins because it turns out that Miriam and Margaret are so pleased with the way the painting turns out, and everyone's so impressed with the beauty of the rooms, that they've now been hired to paint all the rooms of an entire building: 50 rooms across 10 luxurious apartments. Margaret and Miriam take charge of the entire operation. They receive a list of the rooms from the apartment owners, along with the needs, size, variety, and so forth.

Their first decision is to appoint Steve as a chief moving officer responsible for managing movers. Gene is appointed as a chief paint officer responsible for hiring skilled painters to paint the rooms as desired by the customer. Gene takes the list from Margaret and Miriam and creates a draft schedule of the rooms to be painted, in what order, shows that to Steve, who scrutinizes the schedule and makes whatever changes are necessary so that they can promise that when the painters are gonna start painting, the furniture will be gone, and when the painting is done, the furniture will be restored so that the owners can move back in.

They print out the schedule, put it in their clipboards, and give it all to the movers and painters on day one, but things quickly go wrong. Sometimes painters show up to paint the room, but all the furniture is still there. Why? Because the movers are running late, because there's more furniture than expected, or the furniture was harder to move than expected. But something else that looks benign is happening too. Movers are removing the furniture sometimes long before the painters arrive. Why? Because sometimes painting takes longer than expected. Sometimes they can't do the second coat of paint because it took longer to dry than expected. This leads to a spectacular moment where no one can start painting new rooms because the movers have run out of space to store the furniture. Now we have to reset the whole system and everyone potentially has to stop working.

At this point, Gene is very frustrated with Steve. All of Gene's painters are complaining about how Steve's movers are never in the right place at the right time. Furniture is not being moved the right way. In fact, painters are starting to go directly to the movers, telling them what to do, and what it leads to is this weird situation where painters aren't painting because they're too busy telling the movers what to do.

Similarly, Steve is just as frustrated with Gene because the schedule is wildly inaccurate, and it didn't take into account all the unexpected variety being encountered in both the moving and painting operations. Steve is having to firefight movers from different teams with difficult jobs, and Gene does the same with painters. But this is actually causing something even stranger to happen. Problems are now rippling out. Problems are not isolated to a room anymore. It ripples out through the entire system.

Steve and Gene, how are they spending their time? They are hopping from one problem to another, just trying to get teams what they need. Movers and painters are yelling at each other just because they don't have what they need, and it seems like everyone is talking to everyone else. Everyone in the system is spending time coordinating just to get what they need to get the job done. And the irony here is, despite the huge amount of coordination, it is nowhere near adequate to the task. Their bosses all agree on one thing, though: they all think that Steve and Gene are not very good at their jobs.

Including, most importantly, their bosses Margaret and Miriam. They are both very unhappy with Steve and Gene because they have to explain to the customer why all the promises that they made have not been met. None of the apartments have been painted as promised, and the apartment owners can't even move back in. And when they do, half the furniture is missing. At this point, they think they might have to fire Steve and Gene before they're fired by the customer. In all these characters, what good architectures and modularity that we've talked about over the last two days are absent.

That evening, they come up with a different structure. They decide something else is needed. They realize that even if they had the world's best movers and painters, they would not solve the problem. Instead, they have to figure out how they get their painters and movers to work in anything that looks like harmonious coordination and collaboration. They get one more chance from Margaret and Miriam. Instead of sending painters and movers to a room on schedule, they form room teams where they're assigned a group of apartments, which the room teams will complete one after another. In each room team will be a coordination lead responsible for all the internal moving, sequencing, coordinating within that activity.

Now all the room teams can work independently. They will own all the sequential steps of removing the furniture, painting, and restoring the furniture within the team. When something goes wrong, it can be handled within the team. If they really need help, they can go to Steve and Gene.

What is Steve and Gene's job now? It is to create great painters and great movers that they can give to the room team, because they become the customer. Instantly, if something goes wrong, if your furniture takes longer to move, painters will wait patiently, or maybe they will even help.

The notion of what the team is at the edge changes. In the previous scenario, the team was the movers or the painters, and now it is all around the room. Instead of a transactional interaction, now they are in a co-creation activity of creating rooms that are beautiful.

The result: movers and painters are now happier. They feel like they are working towards a common purpose, with a genuine sense that they're on the same team, and they're actually creating knowledge which benefits every future room they paint. Some teams decide not to return the furniture until the paint is dried. Some teams close the windows when they notice pollen sticking to the walls, which requires repainting. In comparison to the previous system, the system is calm, quiet, and orderly. Communication and coordination is way, way down. Instead, they are collaborating around the value-creation activity. Apartments are beautifully painted at a level of quality that Margaret and Miriam are delighted by, which also delights the customer.

I'll just end with a couple observations for Steve and Gene. They had to jump from crisis to crisis in the first scenario. Instead, they are now in a contemplative mode. Steve notices that some of the furniture teams are using blankets to protect the furniture, and he decides to roll that out and creates blanket teams to help support the movers and elevate the quality. Steve also notices many innovations and exemplary practices that are now spread through the organization. In this way, they're experimenting with new structures and configurations and architectures and improved performance, and they are pushing the frontiers of what is possible.

I learned from McPherson. I was reminded about cohesion and coupling. In the first scenario, we had high coupling and low cohesion. In the second, we have low coupling and high cohesion. The teams are able to work independently, but also in harmony towards a common purpose. This parsimony example also gives us ways to see in Team Topologies the notion of enabling teams, productivity teams, all these things.

What is the difference between the first and second scenario? Nothing, except for the management system that Steve and Gene used. Steve, how did I do? Is there anything I forgot?

Dr. Steven Spear

No, that's good. So let's step back a moment to our thesis, which is: there are winners and losers. The reason the winners win is because they're way better at harnessing the intellectual horsepower distributed throughout the organization, harnessing it through collective action towards common purpose. And losers do what Steve and Gene were doing, which is they're very, very poor at harnessing that intellectual horsepower.

Let's walk through the case. This is one part where we want some Slack comments. If we're competing on our ability to harness the intellectual horsepower in our organization, what are conditions in which we're really, really bad at solving problems, and what are conditions in which we're really, really good? Conditions in which we're really bad are that we've got really hard problems. They're very complex. The environment is moving very quickly. We get few iterations, if any at all, to get some learning loops going on. Hazards are very high. Risk is very high, etc. It is wicked hard to do slow, deliberative, contemplative problem solving when the environment is so aggressive against you.

In contrast, if that's the danger zone, what would we call the triumph zone? What are the characteristics? The triumph zone is all the opposites. Things are slow-moving. They're decoupled. They're less complex. You get iterations, shots on goal, low hazard, low risk, lots of safety.

When we start thinking about our own organizations, ideally what we're doing is helping people get out of the danger zone and more and more into the triumph zone to do their problem solving. With this example, Gene sort of illustrated this going on. The first setup was just total chaos, people showing up on a job trying to figure out what to do while they have to try to figure it out while they're trying to actually do it. Some mess.

Then they do a little bit of simplification. They decouple and partition time. There's a moving element and a painting element. It helps a little bit, but it's not great. The movers are still arguing with each other, the painters with each other. Then what they do is, well, we've got to slow things down. We've got to calm the situation. We've got to move into the triumph zone, slow-moving. They say, "Hey, why don't we stage in the basement a mock-up area so we can figure out where is the furniture starting? Where's the furniture going? Where do we have to put ladders? Where do we have to put cans of paint?" Then create standards that we can bring back into the operating environment. Now we have an edge again over the fast-moving environment. That works somewhat, but not perfectly.

There's still some problems. They say, "Well, we've simplified things. We've created these standards in the slow-moving environment to bring into the fast-moving environment, but there's still stuff we just don't anticipate." The first instinct is to grab Jeff off another paint crew and have him help out in the apartment over here, which is having problems. You know what happens then? You've now coupled the systems, because the problems in one apartment now ratchet over to the other apartment because you pull Jeff across.

So now Gene and Steve have this third realization. One, to get people from that danger zone into that triumph zone, simplify things. That's good. Stabilize or standardize things, which you can do in that offline preparation. Then stabilize things, but not by pulling one resource from another project, now making the systems more tightly coupled and more prone to failure. Actually throw a little slack into this system. Maybe I'll have Steve Thomas, who's there on hand just in case.

And then what's the third thing Gene talked about? Once we have much simpler flows and it's much easier to make sense of things: what's feeding me? What am I feeding? We create standards, and now we've got into a situation: what can I expect that I have to do because of what I can expect about my surrounding environment? Then we stabilize that whole thing with Steve Thomas coming in. Now all of a sudden we can have this thing self-synchronized. We don't have to have the paint crews going up and down all the time trying to find Gene or Miriam and Margaret, trying to figure out what to paint and when to paint and where to paint and do all that. We don't have to have the movers going up and down to Margaret and Anne and Jeff trying to figure out, do I move the couch first, or the ottoman, or the chair, and where do I put it, this or that?

Now that we have simple workflows with standards built in and stabilizing factors, the work itself becomes self-synchronizing. What does that mean? What we've done is we've created a much simpler, less complex, calmer environment in which people can do their work in the operating environment. Now they have a huge advantage over it because they're carrying into it the product of their harnessed intellectual horsepower, harnessed through collective action towards common purpose.

What do we see Gene do here in managing this? He simplifies things, pulls things out of performance execution back through practice and to planning, and then takes what's developed in plans and brings it back into practice. That's our story. Like I said, we wanted some feedback on this, and I guess this is where we typically end with asks.

I've got two: an ask and an admonition. As far as the ask, my buddies and I, a bunch of years ago, wrote a book. Some of you have read it. Some of you haven't. If you haven't, buy it, read it. That'd be nice. But more selfishly, in your selfish interest, this whole issue of pulling people out of the aggressive, dominating, disadvantaging danger zone of trying to think during operations and allow people to do really good, hard, deliberate problem solving, collaborative problem solving in planning, it turns out the type of work you do, where you just type into keyboards and there's no movement of physical material, sometimes people lose track of the system into which they're embedded.

So do me a favor. You've got your little phones and tablets and that kind of thing. Type in c2solve.com. My man Daniel is seeing how many clickers you get. Type in there. We've got a product called Flow. Take a look at that, and we think it'll help you be more productive in the triumph zone. That's the ask.

As far as the admonition: if you have responsibility for other people, if you have responsibility for other people, I think everyone here has responsibility at least for one or two, if not many, many other people. Then you are in a position to shape the time and shape the space in which they operate. And if you have opportunity to shape the time and shape the space in which they operate, you have great authority and great power to determine whether they're operating in an environment which is the danger zone, where they're constantly trying to solve problems on the fly, real time, with all the frustrations that ensue, or you can shape time and space so that when people are solving problems, they're solving problems in the triumph zone, not the danger zone. In the triumph zone, individually, they can give fullest expression to their innate creativity, and collectively they can give fullest expression to the collective whole.

I've got to say, if you're in a position to shape time and shape space, that's kind of like godlike powers. But think about this: what it really means is that you have opportunity and consequently responsibility to shape other people's time and space, the finite space that we occupy, the finite time allowed to us, in such a way that at the end of every day, someone can go home and say yes or no: today, the person responsible for me shaped my time and my space so when I went into my moment of test, I was prepared to succeed. The person responsible for me today shaped my time and my space so that when I went into my moment of test, not only was I prepared to succeed, but what I did was appreciated by somebody else. And when I went into my moment of test, the person responsible for me shaped my time and my space in such a way that when I did my work, it added value to my life. And that is a choice. So make the right one.

Gene Kim

Can we use the last 50 seconds to reiterate the help we're looking for? We're very happy with the concepts. We're still debating about the names. If you have any suggestions on what words work better than others, whether it's the four S's, the danger zone versus the triumph zone, we would love to hear them. Thank you so much.

Dr. Steven Spear

Thanks.