Dr. Steven Spear, The High Velocity Edge: How Market Leaders Leverage Operational Excellence to Beat the Competition, Author Dr. Steve Spear (DBA MS MS) is author of the award winning and critically acclaimed book, The High Velocity Edge, is a Senior Lecturer at MIT Sloan School of Management and MIT's Engineering Systems Division, and is a Senior Fellow at the Institute for Healthcare Improvement. He is also a founder of See to Solve Corp, a business process software company. An expert about how 'high velocity organizations' generate and sustain advantage, even in the most hyper competitive markets, Spear has worked with clients spanning high tech and heavy industry, software and healthcare, and new production design and manufacturing.
Dr. Steven Spear
Author, The High Velocity Edge: How Market Leaders Leverage Operational Excellence to Beat the Competition
Usually at DevOps enterprise, we open up with three experience reports, but this year we're going to bring you an expert talk because the next speaker validates so many of the decisions that you've heard of today and you'll hear throughout the next three days. One of the most impactful learning moments for me was taking a workshop at MIT in 2014, which tremendously influenced my thinking. I went to this class because it was taught by Dr. Steven spear, who I already mentioned in my opening remarks. He is famous for many things, but he's probably most famous for writing. One of the most downloaded Harvard business review papers of all time. In 1999, it was published as 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 in support of that. He worked on the manufacturing plant for of a tier one Toyota supplier for six months, since then he's extended his work beyond just high repetition manufacturing to engine design at Pratt. And Whitney does the building of the safety culture at Alcoa and how to make health care systems safe. Recently, he was part of a us Navy initiative to create a high velocity learning dynamic across all aspects of the enterprise. He has spoken at this conference three times, including that remarkable panel with Dr. Sidney Dekker and Dr. Richard Cook. Steve is a person who introduced to me the term dynamic learning organizations, which is all about creating a culture of experimentation as opposed to a culture of compliance.
So here's Steve, who will share one of the most remarkable historical examples of creating a rapid learning dynamic at enterprise scale. Thank you, Steve,
June, 1942 should have been a source of huge celebration for the Imperial Japan Navy. And why is that? Because December, 1941, utterly stunk for the United States Navy, the Japanese Navy had attacked Pearl Harbor surprise attack, destroy battleship row. And immediately after that, go on a wave of conquest through the Pacific Guam Baton, Singapore, this place, that place, and, uh, June 42, this was going to be the coup de Gras. The Japanese Navy was going to sail out from Japan out to midway island, started bombarding the heck out of that island LER the us Navy out of a Pearl Harbor and sneak attack from there and destroy the remainder of the U S force this time, the aircraft carriers, now that the battleships were, um, still burning well anyway, it didn't work out exactly that way for the Japanese and in rather than June 42, being that momentous triumph, it actually turned to be pivotal.
And after the defeat suffered at a midway island by the Japanese Navy, they couldn't wage a meaningful, offensive, the remainder of the war. Now that's not to say that it was easy going for the U S Navy, uh, Japan staged, uh, a brutal, bloody prolonged retreating defense, but it was retreating defense. And so you might ask yourself the question. So, you know, with these great plans that were being cooked up and operationalized in June, 1942, what went wrong? And when did it go wrong? Now, let's think about it. What's the Hollywood answer? Well, the Hollywood answer was in the movie recently, so we know what the Hollywood answer was in, uh, late in the afternoon, on the 4th of June command away, McCloskey flying his airplane attack came in, saw break in the clouds, came through the clouds as he's diving down, whoa, there's a Japanese flagship. He radios his compatriots to come and attack the same flagship and he leaves the attack and it's decisive in the battle.
Well, that's what Hollywood tells you. So here here's the thing on the left side of the screen are these two authors wrote this enormous book. It's gigantic book, hundreds and hundreds of pages detailing the battle of midway from the Japanese perspective. And you know that if someone sits down and writes a book, which is three, four or 500 pages and any bitty, little bit of type, um, they're not going to reach the same conclusion is Hollywood. So then you start reading through the book and say, oh, you know, I wonder what they have to say. And in fact, at the almost end of the book, they say, Hey, reader, you've just plowed through all this dense detail. When do you think the Japanese lost the battle of midway? And so, you know, as a trick question, right? It's like, it can't be possibly when, uh, commander McCloskey.
So the flagship it's gotta be earlier start thinking, well, when could it be, could it be noontime nice to obviously early in the morning to obvious got it. It had to be late in may when the Japanese Navy was laid and discombobulated, leaving the harbors around Tokyo. And maybe, I don't know, what do you see if you get discombobulated, you get recombined, whatever, get reorganized that they didn't get reorganized around midway by the 4th of June. And that was their undoing. So anyway, having flipped through the, all the way to the beginning of the book, you go to the back of the book again, and the authors, it's kind of funny, right? There they go from this very sort of dry prose to almost slapstick. They say, Hey, reader, pipette, you went all the way to the start of the book and found a may as when the Japanese Navy losses cause they got discombobulated. And guess what? The Japanese Navy lost the battle of midway no later than 1929. And like what, uh, cause 1929 is not even in the book, but here's the thing. If I, you know, my reaction to that book was 19 tiny, 1929. And what, uh, all right, let me offer another offer is that the Japanese Navy may have lost by 1929, but the us Navy won by 1895. Now you probably don't know what the is. Anyway, let me explain that
In the late 18 hundreds, the United States Navy was faced with huge, huge change while the and technological. And as I start talking through this case, start thinking about all the strategic and technological changes we have in 2020. So you got your, um, um, internet of things. You got your industry 4.0, you got your G five, you got your AI, you got machine learning, got data mining. And, uh, all of that lumped together. I mean, how often do you see in an article with a headline is basically throw your past away your history hasn't been written. You're gonna have to completely rethink not only what you're doing, how you do it. Well anyway, that was a real problem for the U S Navy and about 1895. And I'll tell you why. Up through, up through the mid 18 hundreds, the United States had a very continental focus.
You know, you started off with a 13 diminutive. We colonies on the Atlantic coast, but you got the Louisiana purchase, got westward expansion, you got Lewis and Clark finding, finding that the other people knew it was there. They found it for themselves, the Pacific ocean on and on, but by 1900, just the scale is by 1900 of the 50 states in the union we have today. And you can peel off Hawaii and Alaska. So down a 48. So the 48 continental states, 45 are already in the union and Oklahoma was a territory. So it wasn't quite a state yet. It was on the way. And so by the time you get to 1900, you have the United States sort of having solved the manifest destiny problem and the continental expansion problem. And it starts thinking itself less and less is only a continental power and more and more is also a transoceanic power.
Now, what does that mean for the Navy when he was going to reach her redefined job? Cause its job hat, his job had been, um, coastal defense. Now it has a crew thinking about how it expands itself, transoceanic, glee, um, you know, big oceans, the Pacific in particular. And, uh, thing is it's more than just the distance involved because then the other side of the Pacific ocean, guess what the Japanese name is going through a same similar kind of self-reflection because Japan had been in a self-imposed isolation for the better part of 400 years and coming into the late 18 hundreds Meiji restoration or that they started thinking in terms, well, how can we be a world power transoceanic? So one of the ways that it started that exploration is kicking the stuffings out of the Russians in 19 0 4, 19 0 5. So anyway, you have the United States Navy now having to think about projecting power and protecting interests over the Pacific and on the other side of the Pacific, there's a potential adversary somewhere someday about something.
All right, now that that's the strategic element changing what we do, but there was also a huge amount of, um, technological change that the us Navy had to worry about. Now he hears it is a great side by side comparison to battleships, right? And say a battleship battleship, but take a look on the left-hand side of your screen. USS Texas commissioned 1890 to maybe kill it laying was 18, but 1892 is good enough guests, 1892. You take a close look, you see, all right. So she's got a steam based power plant. She's got, um, um, a steel haul, but you start looking at where the guns are. The guns are in exactly the same places on the USS constitution, or, you know what, uh, Admiral Nelson might've fought it out of battle, battle of Trafalgar, its side mounted and the tactics to fight with this ship and fight against ships like that.
It hadn't really much advanced. Yeah. You had more control where you went. You didn't have to depend on the wind quite so much, but kind of the same tactics strategy, et cetera, would have applied in 1892 onboard the USS Texas as in 1792 on comparable ship. Now look on the right-hand side of the slide here. You have USS Indiana three years younger, that's it. But you know, the big difference that the Indiana she's got gun turrets and they say, oh, what's the big difference? And the difference is huge, huge, because when you have side mounted guns, what can you do? You just kind of try and, you know, cross the Ts at war, but um, targeted gon take a closer look here, targeted guns. What does that give you opportunity to do well? It gives you the opportunity to, um, aiming at anything you want because you've got two, three, sometimes four tarts on a ship.
Each gun is independently amiable. And uh, when you've got that capability, what that does is it lets you, um, aim in all sorts of different places, which the whole side mounted thing never, never allowed. I see put these two things together. What do you have for the us Navy one they're facing this huge strategic change and that'd be enough already as it is for most of us when we have to really repurpose what it is we do. But then there's huge technological change, which is they had to repurpose how they did whatever they were going to end up doing. Now at that moment, at that moment, the leadership of the United States Navy, these guys, they had a choice and I just want to hear this is that in 1900, who were the leaders in the United States Navy? Well, the leaders of the United States, Navy war men, they were white men.
They were Protestant men who had grown up with a sense of, um, uh, elitism, classism, hierarchy, status, et cetera, et cetera. And you start thinking about what folks who've got, all those isms, you know, I think it's to their advantage, not their that disadvantage, but people with all those isms working for them do, the only way they do is they say, oh, well, you know, everybody else, that's, that's a bunch of jerks. What do they know? We're going to hang out. We're going to do all the thinking here. We don't want to get our pretty hands dirty and we'll do the thinking. We'll push out until what all those other folks should do. So that was a choice. That was a choice, which is they could have consolidated the thinking and the decision-making to the Navy yard in Washington, DC. And once they had thought through the strategic question, what are we going to do on the TechNet lock the question, how are we going to do it?
David Cook pushed instructions out to the Navy with the expectation. They put the instructions, they push the instructions out and what are they getting in return? And I, I, sir, away we go and that would have been the natural, the natural thing to do well, that's not what they did. Instead, those leaders with all the social societal economic advantage they had, when it came time to the question of, uh, what do we do, how we do it, they got together and said, we got no idea what to do and how to do it. It's so far beyond, so far beyond any experience, we've had to allow us to approximate analogize extrapolate, except we got no idea. What do they do is say, you know what? We got to get, uh, the distributor problem solving capability of the whole Navy involved in this. And so they go through the series of exercises to push out to the fleet, to push out to individual, uh, shipped skippers, but ship skippers, pushing out to their individual crews problems.
Like how do you, how do you fire a gun? How do you aim a gun? How do you aim a gun and rolling seas on and on? And uh, what did they want done? Not the ICER, you know, anchors away what they wanted done in return was experimentation with the idea that whether the experiment worked or not, the lesson learned the lesson learned would come back for consolidation, then synthesis and then redistribution as a collective lesson learned as way better than anybody else has. All right. So anyway, where does that lead and how does that get operationalized while they go out to the, uh, the, the, uh, they go out to the squadrons, the squadrons go out to the ships and even onboard the ships, the ships skippers, go out to their crews and say, Hey, Dan handed us these guns in these weapons, in these turrets and they're wildly complex.
And, uh, we, you know, Hey, so a chief petty officer, why don't you try a couple of different things with your gun turret crew and the guys at the, uh, stern while you're up in the bow, they'll try some other things and onboard the ship. We'll come up with some sort of synthesized, consolidated, uh, lessons learned package. So when we go out and experiment and test and go through drills and exercises with our ship, you know, we got the collective best understanding of everybody on board, the ship and not just what the captain thinks. Well, anyway, that was one round. Now another round of this is, um, you have these ships where you've now introduced really advanced power plants and really advanced navigation and really advanced weaponry and really advanced communication. You know what you've done? You've created the risk that you're going to fry the brain of the captain, because back in the day, it sales, he's going around this way.
That way sailing around, you know, someone, Hey, captain, here's what's happening. Oh, thank you. I'll think about that. I'll tell you what to do. Oh, captain, here's something I was thinking about and you get on board, one of these, uh, then modern ships and the amount of information flowing. If it goes to the captain, his brain's going to melt down. The Navy invented this idea of a combat information center. And the idea was have the information coming in from this division, this department, this division, this department come into the combat information center, where there would be a methodical way of absorbing digesting, scrubbing re-interpreting. So the information that went to the captain was only the things the captain needed to know to make captain decisions and other information, which wasn't captain decisions. It was department decisions or division decisions, or watch station decisions. That information will be parsed and go to the right places.
Now, when this idea of a CIC combat information center came up, guess what? The ne the Navy knew about the appropriate design and use of those things. Nothing, because they had never been designed and used before. And so what did the leadership of the Navy do? The same thing they said, Hey, you know, that's a problem. We don't really understand how that thing works. So here's what I'm going to do. We're going to push out to the ships, the opportunity, the authority, the responsibility to experiment with those CIC. And, uh, what we're asking is not that they use them, right? Cause no one knows what right is. But we asked them to do is use them creatively and capture the consequences of using them creatively this way or creativity that way or creatively some other way. And, um, in fact, they gave so much authority to a ship captains that if a ship was still being built, the captain could go to the ship guard and talk to the engineers, the designers, the builders, and personalize it and think about it.
We tend to think of the military. Oh, well that's highly standardized command control top down Marc tonight, right? No, no, no. Captain look, you know, you're, you're a young guy. We're a bunch of old guys, but we want you to go to the ship yard and tell them how you want your CIC configured. So you can run the experiments, the creative experiments that are only you can think about now, anyway, um, this continues forward. So think about the scale we started at, which is getting the, uh, the petty officers and the chiefs to figure out how to operate the crew within a gun turret. And then we go to the skippers and say, well, how do you coordinate the guns and everything else for the combat information center. We've got another unit of analysis, which is the task force. And he had this question then, um, now that you've gotten in, I think about the change, right?
Cause now that you've got all this advanced technology of communication, propulsion, armaments, et cetera, you get a lot of different kinds of ships. You've got your battleships, you got your cruises, you got your destroyers, et cetera. And the question is, how do you take all those pieces and put it into a meaningful whole, um, not whole, but whole complete so that, uh, the pieces come together in a sum greater than the parts. And so again, I think about the, uh, the dudes in the Washington Navy yard, who'd grown up with status and hierarchy and privilege and elite ism. And the question comes down to, so what do you want to do with these, uh, task forces of disparate ships? And I said, well, you know what we think we should do. We don't know. We don't know we haven't done this before. So you know what we're gonna do.
We're gonna run a series of, uh, I'll be careful on the wording here. We're going to run a series of exercises. I'm using little either. Cause that's not exactly what they called it. They said, you know what, if you want to project power across the Pacific and protect interests across the Pacific. And you're trying to do it with these brand new diverse, uh, sciences and technologies. You have a lot of problems because we don't know how to do that. And so from the 1920s through, uh, the end of the 1930s, right into 1940, the United States Navy, uh, ran these exercises. But it's very clear what they call it. It's very important. What they call them, they didn't call them exercises, exercise. It sounds like, um, I don't know, Jean writes up a plan and then Steve has to look at the plan and say, oh gee, I got the plan.
I'm going to execute it. And I get graded on what, how well I adhere to the plan, but they didn't call them exercises. They call them problems. I think about what a problem is. A problem is we've got an S situation, but you know, we don't know what to do. Like wow, if we're going to be, um, transoceanic in the Atlantic and the Pacific, we might have to defend the Panama canal for merchant shipping for military shipping. Well, how do you defend the Panama canal? And everyone said, I don't, I don't know. I said, well, you know, that's a problem. Go figure it out. And so what did they do in 1923? They send out, uh, many, many ships and thousands and thousands of sailors said, you know what? Try to defend the Panama canal and let us know what you did and how it worked.
And then as you can see through these titles, they attack and defend the Panama canal more than once they try to figure out what Jesus, if you're going across the Pacific lot, a little islands, um, could be useful. You know, how do you secure an island? Everyone? I don't know. Well, that's a problem. Why don't you go find out? So 1931, it looks like amphibious, landings, go try to figure out how you get sailors and machines. I'm sorry. Get a soldiers and Marines off of ships and get them safely ashore so they can exert control. And it goes on and on and on these dozens of, um, problems. And again, it's the same basic philosophy. We've got a situation. We don't know what to do rather than trying to sit around and think through an answer based on, you know, like complete ignorance. What we're going to do instead is let people go and experiment, experiment in a distributed fashion.
And what our job is, the central focus is to pull in those lessons, synthesize those lessons, consolidate those lessons and go back with what the collective wisdom is versus the individual wisdom. Now, where does that lead us is that, um, you've had this series of, um, fleet problems all through the twenties in the thirties. All right. So now let's bring us back to midway. What's going on, get back to midway and the Japanese. And, uh, there are models out to midway island to lore the U S and think about it. The U S if you have to think about the, um, their battle plans for midway, you know, what it depended on battleships one would have assumed the battleships show up, but they didn't. And so the Japanese is thinking, look, you know, they would have been planning on aircraft care plus battleship. They don't have the battleships.
We're gonna clean them, clean their clocks. Now this gets back to, um, the part about when did the us win 1895 through this distributed experimentation approach to problems with no way to thank you through to the answer. But anyway, these guys wrote shattered sword. Did they come up with 1929? So this story goes, something like this. They say 1929, by 1929, the Japanese Admiral T the Japanese Admiralty had decided they decided, think about the Karrikins of that. In 1929, they had decided how war would be wage against the United States in the Pacific ocean. That's not clear that they had sort of, um, I dunno, had a conversation with the American sail. What w what have you decided about Warren and the Pacific, but the Japanese animal, they had decided how war would be weighted in 19, that they had made their decision in 1929, about how war might be waged in the 1930s, 1940s.
They decided, but anyway, here's the thing about making a decision like that. Once you decide that this is what's going to happen, everything else flows out of that decision, how do you design an aircraft care? Well, it's gotta be compliant with the decision of how we're going to wage war. How do you design an aircraft boom, compliant with the decision we made in 1929? How do you think through things like fueling arming, rearming, refueling, watching recovery relaunch and repurposing navigation, communication reconnaissance? Well, you know, we got, we got, and I mean, this, uh, pun intended, we got an anchor point. We made a decision in 1929. How war will be fought right now, carrying this through a little bit further. So, um, these guys, uh, partial IntelliJ, describe what happened here based on this 1929 decision. So go into, um, the battle of midway, the Japanese admirals had written a battle plan and the battle plan detailed what was supposed to happen.
So they decided to do a war game. You know, it kind of little tabletop, little wooden ships and whatnot. They was decided to do a war game, to rehearse for the battle of midway. So what they do is, uh, let's use this as our a table. They've got a table with a little stuff on top, and the animals are standing over here is standing over here is some poor junior officers to stand in for the Americans. So he's got this battle plan in front of him. He's looking at the table. And he says, you know, that kind of way, I'd never fight this way. I do something different. He starts fighting. And then after a few moves, the referee kind of blows the whistle flows of throws a flag and says, oh, and you don't want, he said, he said, why? No, no, no. You know, the junior officer, he's too stupid to, uh, read the very elegant, sophisticated battle plan. He's not following it. And because of that, we've got to disqualify him and do this again. Now, you know why they stopped the war game. The junior officer who had look down on the table and looked at the battle plan, it was like, he's winning, he's winning. Cause that's a losing battle plan that we start thinking about what the Japanese animal should have done at that moment.
They should have said, Hey, junior officer, what are you seeing as flaws in our plan? And, uh, now just think about how hard that is. And it was hard for them, but instead, you know what they did, they fired the guy and they got another junior officer. And this thing becomes like Keystone cops, right? Cause the next guy, he looks at the battle plan. He, um, he looks at the, uh, the table with all the fleets, arrayed, his little miniatures and said, you gotta be out of here, flipping mine a fight. That way, I'm going to do something different. And in a way, this book ends, they described the Japanese animals is fine firing one officer. And then the firing the junior officer, and then firing a petty officer and then a sailor. And then they're getting people off the streets of Tokyo, but it turns out anyone who can read the battle plan books, this idiotic who would fight this way now, um, what's happening on the us side is that, uh, they had gone through these exercises, these problems in the twenties and thirties.
So they didn't have a battle plan. They had a portfolio and when they didn't have balance ships, they said, well, let's flip the page here. And uh, let's see what else we got in our book. Well, you know, page one we can't use, but this one, this one will work. Let's go with that one. And not only that, in terms of having place to pull upon that a mindset, what was their mindset? You know, life is going to throw you situations where, you know what, you just don't have the answer. You may not even know what the problem is, but you can go out and you can experiment and learn as quickly as you can. So on the Japanese Navy shows up in midway island and you could argue they had a bigger fleet and it had more planes and certainly had more experience in terms of pilots and sailors, but they show it up to wage war against the Navy, that innate inmate in the fiber of its being, what is, uh, this, uh, certainty that they didn't necessarily have a right answer, but as to behave in a certain way and exploratory and experiment, uh, in an exploratory and experimental way, they could discover the right answer.
Anyway, the Japanese Navy showed up at midway and they got their clock kicked because they shut up and they Ford folks who, um, rather than have this compliant form of leadership over the last 20, 30, 40 years, they showed up when the Navy that had had this very engaging, experimental, distributed problem, solving culture, you know, and smart, beat stupid just about every day. So anyway, folks, um, I'll hold to, uh, this storyline that, um, when in doubt, having a way to get, um, smarter, faster, that's gonna win. If not every time it's going to win most times. And when it wins, it's going to win by a whole lot. So, uh, anyway, I just want to thank, um, the invitation from the it revolution people to talk with you or ask you, I guess, in this format. And I appreciate all of you, uh, being talked at, um, for those who want to talk with, um, you know, here's how to get, you know, visit our website, get in touch.
Um, got any questions about what I said, objections, criticism. You just want to say, Hey, Steve, you know, you're full of it. That's fine too. Um, look, we've spent the better part of last 20 years trying to change behavior from this command control compliance audit approach to a much more, uh, distributed, engaged, experimental discovery approach. So anyone who wants to partner on trying that out, wherever you happen to be, let us know, uh, we've created some software tools to kind of help that behavioral change in certain circumstances. So if you're curious as well, what we've cooked up around that get in touch. But, um, let me just offer a, this, uh, last, uh, encouragement is when in doubt do it as if you're in doubt, it's cause you don't know, but if you do something, you might learn something and learning something. That's a good thing. So, uh, that's what I got to say on over and out. Bye bye.
Unlimited users from organization
Gene Kim's Audit and Security Playlist
Matt Bonser, PricewaterhouseCoopers LLP; Yosef Levine, Deloitte; Jeff Roberts, Ernst&Young; Michael Wolf, KPMG; Gene Kim, IT Revolution
How Fannie Mae Uses Agility to Support Homeowners and Renters
Kimberly H. Johnson, Fannie Mae; Tim Judge, Fannie Mae; Christopher Porter, Fannie Mae; Ramon Richards, Fannie Mae
From Your Auditor Friends: What We Wish Every Technology Leader Knew
Clarissa Lucas, Nationwide Insurance; Rusty Lewis, Nationwide Insurance