Transformation is highly complex and requires an integrated operating strategy and vision, people, process, technology, capital, cultural development, and performance criteria.
Every executive I meet with has concerns about the future. They all understand conceptually, that business stability and remaining the same is not a viable option. Yet their daily behaviors, choices, and actions are in absolute conflict with transformation-scale improvement for a variety of reasons. Stuff happens – But these harsh realities leave executives daunting and confused about how to change at the required scale of magnitude, velocity, and repetitiveness to achieve sustainable success. To top it off, protecting revenue and short term financial performance often makes major change the first casualty. Returning to the well (i.e., same thinking, same processes, same people, same metrics, and same results), procrastination, postponement, or complacency are all much riskier and costly choices.
Everyone is struggling with the meanings of IoT, Industry 4.0, artificial intelligence, emerging mobility and analytics, and many other evolving digitization and technology possibilities. All eyes are on the business models of Amazon, WalMart, Home Depot, Houzz, and many others conducting most of their business over the internet. The chaos, turmoil, fears, unknowns, perceived risks, costs/benefits, and other critical factors of change are very real and in fact, even higher in business model transformation initiatives.
Understanding ever changing customer preferences is a great daily global challenge. Too much focus is on technology by itself, and quantum leap technology-based investments are risky. Transformation is highly complex and requires an integrated operating strategy and vision, people, process, technology, capital, cultural development, and performance criteria. A guiding light is needed in this unknown tunnel of transformation. Hence the approach of Lighthouse Pilots.
Critical First Step: Understand the Complex Dynamics of Transformation
Transformation is riddled with complexities, risks, unforeseen costs, wastes, and missed customer opportunities. Why is this so? Transformation strategies and challenges have the presence of Reflectivity – Circular and network relationships, interaction properties, and interconnectivity between causes, effects and solution options. In essence many customer requirements and responsive causes and effects are multidirectional, fuzzy, and relative at any moment in time. The number of solution options are also limitless. Attempting to layer evolving technology solutions over these challenges complicates things even further. Innovation is the answer, but the specific details of how innovation is accomplished holistically (including the successful integration of digital technology solutions) needs a different approach for success.
Some organizations are now labeling their continuous improvement initiatives as transformation. Continuous improvement by its very nature is Typical Reasoning, a more deterministic incremental approach to improvement focused primarily on the As-Is processes and current conditions.
Transformation is (or should be) more of an Affordable Exploratory Reasoning approach with many complex unknowns, inevitable changes, and perceived risks ahead. These initiatives are non-deterministic, innovative, open-ended, and evolutionary – Yet with many very structured, disciplined, and deliberate smaller steps. Too many of these initiatives are solely focused on technology and software solutions (often referred to as digital transformation). Creativity, innovation, evolving technology, and cultural development must all become well integrated into this approach. Herein lies the complexity from multiple and often conflicting directions.
Engage the Right Resources Up Front
The end-to-end cycles of transformation vision and strategy, planning, deployment, and execution are complex and often severely inhibited by the same internal thinking and daily conflicts with current conditions. Wishing and hoping for transformation is not transformation. Transformation requires innovative, deliberate, and well integrated and orchestrated initiatives from strategy to consistently achieving superior market and operating performance. Organizations can benefit immensely from an outside perspective that provides a more definitive perspective, approach, and plan for their proposed or required transformation initiatives. The goal is to strive for breakthroughs, strategic differentiators, or advanced business models that result in superior competitiveness and operating performance. For these reasons, an external perspective such as our firm combined with the Lighthouse Pilot approach to transformation makes sense and better controls the risks and costs of implementation.
By the way, the future success of all organizations requires mastery of both transformation-scale improvement and continuous improvement – Especially the human side of things. Every new breakthrough becomes tomorrow’s continuous improvement activity. People, talent, and continuous cultural development are the keys to sustainable success.
What Is A Lighthouse Pilot?
I remember this term from the 1980s and 1990s used in conjunction with reengineering and breakthrough improvement. A Lighthouse Pilot is a strategic model project that aims to achieve bold and rapid results, while better defining the unknowns and reducing complexity for the next follow-up pilot activities. Lighthouse Pilots integrate the larger challenges of Lighthouse Pilots are typically well defined up and are completed in 3-4 weeks. Examples of Lighthouse Pilots might include but are not limited to:
- Better definition about how to optimize the customer experience;
- Operating assessments in weak link areas;
- Talent development planning;
- Highlighting leadership and change barriers;
- Customer-to-cash concept design engineering;
- Controlled technology application pilots;
- Concept design of real time digital dashboard performance;
- Cultural readiness assessments;
- Vision development of immediate availability of product requirements; or
- Acquisition portfolio turnaround and get well requirements.
The name Lighthouse Pilot is analogous to lighthouses at sea which serve as navigational aids and warn vessels of dangerous areas. In a controlled pilot setting, Lighthouses integrate the complexities and unknowns of broader transformation requirements: Innovation, a breakthrough operating strategy and vision, people, process, technology, capital, cultural development, and performance criteria. The Lighthouse Pilot process is what really boosts the probability and speed of transformation successes by preventing unforeseeable risks, costs, bad CAPEX decisions, and major customer and stakeholder disruptions. Think of this approach as a dynamic, agile-waterfall-agile-waterfall network of concurrent pilot activities that help to connect the dots and add more clarity to the transformation path. Lighthouse Pilots are aligned and selected to explore, experiment, test, and adjust the organization’s strategic vision for change. They also serve to provide new insights and knowledge about how to convert from high level operating ideas to a daily living best practices.
Objectives of Lighthouse Pilots in Transformation Success
The primary objective of Lighthouse Pilots is to add clarity and direction to the unknown complexities, risks, and very potential cost overruns of transformation initiatives. Lighthouse Pilots assume that there is a well defined transformation vision, and an understanding of the gaps in operating infrastructure to plan and execute a successful transformation initiative. This is an area where many organizations do not give enough thought, diligence, and definition. Hence, transformation is vague, it cannot be well articulated and embraced, and it becomes more of a piecemeal technology exercise.
As we mentioned earlier, Lighthouse Pilots are strategically selected and defined. Lighthouse Pilots are very revealing in the front end of transformation initiatives. Keep in mind that since transformation and continuous improvement are both ongoing, open-ended initiatives. As such, Lighthouse Pilots can be planned and launched along toe transformation journey to add clarity and direction to other activities down the road.
The chart below provides a graphical illustration of the Lighthouse Pilot approach.
Benefits of the Lighthouse Pilot Approach
The results and lessons learned from these concurrent Lighthouse Pilots produce main, interaction, and residual guidance to transformation initiatives:
- Main Guidance applies new knowledge and clarity in proceeding with an existing model pilot;
- Interaction Guidance applies new knowledge learned from a current model pilot that is extremely important to another existing or follow-on model pilot; and
- Residual Guidance refers to new knowledge and insights gained from one or more model pilots that spawn a totally new interrelated model pilot with new objectives.
Lighthouse Pilots are like a well planned set of innovative development projects in several deliberate small steps. In the beginning the journey is complex with many unknowns. When enough Lighthouse Pilots are completed, the transformation journey becomes much clearer and well defined . . . With higher implementation velocity, faster time-to-benefits realization, and much lower costs and risks.
The sheer complexity of digital transformation initiatives often underestimated, oversimplified, or too reliant on technology solutions. The Lighthouse Pilot approach to transformation proactively manages complexity, risks, costs – By building new knowledge and unmasking the obstacles, vulnerabilities, and unforeseen polarizing forces that run transformation initiatives off the tracks. Lighthouse Pilots provide a continuous transformation model of holistic strategy followed by deliberate, prioritized, high impact/quick ROI transformation activities that all fit together.
What Do You Do Next?
First of all, successful transformation initiatives require bold, courageous transformation leadership. Innovation is a top leadership priority. This means thinking innovation and establishing the course for the journey and infrastructure for success. As we mentioned earlier, transformation is highly complex and requires an integrated operating strategy and vision, people, process, technology, capital, cultural development, and performance criteria. Organizations can quickly lose competitive ground through postponement or not getting through this first part of their transformation journey with velocity, precision, and innovative and differentiating ideas. Below is a simplified diagram of how to begin your transformation journey.
If you would like to discuss this post or your requirements in greater detail, please feel free to contact The Center for Excellence in Operations, Inc. or send a direct email to the authors below.
Terence T. Burton is President and Founder of The Center for Excellence in Operations, Inc. (CEO), a management consulting firm specializing in strategic and operational transformation. Terry has four decades of extensive operations and supply chain experience as a hands-on practitioner and executive in private industry, and has led consulting engagements in a wide spectrum of industries, having consulted with over 350 clients in 23 countries on their strategic and operations improvement initiatives. Terry can be reached directly at firstname.lastname@example.org
Dr. Helmut Falser is the European Managing Director of The Center for Excellence in Operations, Inc. (CEO). Helmut has worked extensively with many premier and mid-sized high technology, telecommunications, software, automotive, medical equipment, and insurance industries throughout Europe. Prior to his consulting career, Helmet held senior executive positions with several high technology companies. Helmut can be reached at email@example.com