ideas to innovation idea portfolio management -- pdma portfolio conference 2009 (1)
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BOEING is a trademark of Boeing Management Company.Copyright © 2009 Boeing. All rights reserved.
Portfolio Management for New Products & Services Conference Fort Lauderdale, Florida , February 25, 2009
Dr. John LacontoraThe Boeing Company
Scott MathewsThe Boeing Company
Ideas to Innovation: Idea Portfolio Management
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Abstract
Your employees are a rich source of potentially scores of profitable ideas given the right opportunity. But how can you sort through the hundreds of proposals to uncover the handful of nuggets that will really accelerate your business growth? The Boeing Ideas to Innovation (I2I) process couples a social networking ideation event tool together with an idea portfolio management tool to mature and select the very best strategic opportunities. The presentation will provide an insight into this emerging process on how corporations can implement and manage their innovation pipelines.
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Ideas to Innovation (I2I)
Ideas to Innovation (I2I) is a- Systematic approach to transform ideas into a business opportunity
- Means to stimulate the capture and maturity of business ideas for growth
- Streamlined method that integrates well into existing business development gate processes
I2I enables Boeing to…- Rapidly generate dozens of viable business ideas to address our most
vexing business challenges
- Draw upon the best of Boeing’s customer knowledge and capabilities
- Cull rapidly through the ideas in weeks to identify the most promising few…
- Address the biggest hurdles first, be they system concept, technology, business model or market acceptance, and…
- Continuously manage a portfolio of business ideas to mature the best.
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Notional I2I GrowthIdea Filer and Maturity Funnel
Customers
Partners
Markets
Scans
Open Source
Business Intelligence
Competitive Intelligence
Internal Database
Staff
Idea Generation
Ideation Events
DataMining
IndividualInput
Initial Screen
andReview
Ideas Portfolio Management Idea Transition
Strategic Fit
MeetsCurrent /Future
CustomerNeeds
CompetitivePosition
Conceptof
Operations
Revenue Potential
FeasibilityandRisk
Analysisof
Alternatives
Investment CostAnd
FundingStreams
Enterprise Capabilities
BusinessPlan
VirtualPrototype
WorthinessPartner
Alignment
Opportunity Pipeline
Business Unit Pursuit
Stage GateProcesses
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Idea Development – The Starting Point
Scouted the best of idea development practices and tools from leading innovative companies
Adopted challenge event-based ideas capture methods that target key strategic objectives
Developed a disciplined approach to identify key next generation revenue opportunities…
Operationalized an “Ideas to Innovation” framework the fits with Boeing business processes and culture
Discovering the need for a broader innovation framework
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
I2I Framework
The I2I framework delivers opportunities to business units
Idea Flow
Opportunity Transition
Opportunity Transition
Strategic IntentStrategic IntentIdea
GenerationIdea
Generation
Idea Portfolio Management
& Learning
Idea Portfolio Management
& Learning
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
I2I Idea Generation
Idea activities generation tailored for Boeing’s culture
Initial PrescreeningIdentify Interesting Ideas
with High Potential
Review Team ScreeningIdentify Ideas for
Further Development
Unrefined ideas Limited inputs from
Prescreening questions
Unrefined ideas Limited inputs from
review team questions
Unrefined ideas Limited data (if any)
Boeing Idea Generation process
- Adapt Imaginatik - Idea Central portal
- Process developed through collaboration with help of the business and decision analysis communities
Challenge Event-Based Approach
- Events based
- Executive Sponsorship
- Ideally 10-12 days with a weekend
- Targeted Audience invited
- Review Team
- Define what a good idea looks like
Idea Flow
Opportunity Transition
Opportunity Transition
Strategic Intent
Strategic Intent
Idea Generation
Idea Generation
Idea Portfolio Management
& Learning
Idea Portfolio Management
& Learning
“Raw” IdeasParticipants Input Ideas on
IC Idea Form
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Manage Ideas as a Portfolio
Two ways for new businesses to succeed
- Doing the right projects = portfolio management
- Doing projects right = project management and gate reviews
- Enriching the right set of ideas = idea portfolio management
More than just best individual ideas
Select right mix of opportunities to achieve strategic goal
Dynamically manage the maturation of ideas and the portfolio
Seamlessly feed business development processes
X
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Challenges for Idea Portfolio
Ideas (initially) have little value
- Combine idea “fragments” into viable business ideas Ideas (initially) have little “working” data
- Create a progressive path to mature idea: qualitative quantitative Many ideas aren’t worth pursuing
- Determine rapidly idea’s “worthiness” and “investment effectiveness”
- Eliminate those that don’t measure up Technologists (idea champions) don’t know business methods
- Provide business engineers to guide process- “Business engineers”: engineer + MBA to design path from technology gem to
market value
Strategically comparing apples to oranges
- Identify set of common attributes that apply to all ideas
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
I2I Idea Portfolio
Idea Portfolio management tailored for Boeing’s culture
Ideas flow into Portfolio
- Ideas screened for strategy alignment
- Idea “fragments” combined into viable business ideas
Ideas matured within Portfolio
-Three phases of maturity
- Idea advance as rapidly phase deliverables completed
-Business engineers provide guidance and validation
Learning PhaseRange of Performance
Quasi-quantitative
Discovery PhaseValue and Investment
Quantitative
Idea PhaseContextualQualitative
Idea Flow
Opportunity Transition
Opportunity Transition
Strategic Intent
Strategic Intent
Idea Generation
Idea Generation
Idea Portfolio Management
& Learning
Idea Portfolio Management
& Learning
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Portfolio Progression
Idea Phase
Learning Phase
Discovery Phase
START OF MANY IDEAS
MATURE IDEAS
Idea Phase – Qualitative- Business concept- Value proposition- Related trends and technology
Learning Phase -- Ranges- Value ranges- Risks and opportunities- Assumptions and contingencies
Discovery Phase -- Quantitative- Business case- Investments and mitigation- Customers and competition
Continuous strategy refinement
Stage GateProcesses
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Learning PhaseRange of Performance
Quasi-quantitative
Discovery PhaseValue and Investment
Quantitative
Idea PhaseContextualQualitative
Idea Flow
Opportunity Transition
Opportunity Transition
Strategic Intent
Strategic Intent
Idea Generation
Idea Generation
Idea Portfolio Management
& Learning
Idea Portfolio Management
& Learning
Portfolio Data Validation
StrategistReview
FinanceReview
Business Engineers Review
Data Validation Critical to Portfolio
- Independent review at each phase
Strategist review and filtering
- Validates alignment to strategy
Business Engineer review
- Validates attribute data for each phase
Finance review
- Validates business case before transition to business unit
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
ValueCalculation
Portfolio Scoring Framework
Magnitude
Uncertainty
Launch Year
Potential Value
Question ScalesContingent
ValueRisk-Averse Probability Value
PV Earnings
MarketMaturity
Market Entry/ Bid Year
Adjacent/future Projects Value
ValueCalculation
ValueCalculation
TimeCalculation
ValueCalculation
M-153413_Portfolio Mgmt | 13
ProbabilityCalculation
ProbabilityCalculation
DiscountCalculation
Leverage
Weight
Magnitude
Uncertainty
PV Investments
TechnologyMaturity
Objectives
ROI
Revenue
OperatingCosts
(Margin)
ProgramInvestments
Timing
NBF, B&P, … Requirement
Platform Potential
Magnitude
Uncertainty
PV Cost
DevelopmentMaturity
Value
Uncertainty
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Phase Information Maturation
Project Management Process
Idea PhaseBusiness
Proposition
Learning PhaseRisk & Opportunity
Exploration
Val
ue
Uncertainty/Risk
Discovery PhaseBusiness Value & Investment Targeting
Depth of Understanding
Idea
Por
tfol
io B
ound
ary
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Real Options in the Portfolio
“Datar-Mathews Method”, Boeing patent #6862579
timeT0 commercialcash flow
PVT of cash flow @rmPV0 of cash flow @rm
PV0 (X) @ri
pilot R&Dinvestment
X
Ideas evaluated using real options methodsPortfolio process gathers the right information
-Profitability, uncertainty (“volatility”), launch cost (“strike value”), timing (“exercise date”)
Determines appropriate investment balancing value and riskChallenges
-Limited quantitative information
-Complexity of analysisPatented methods
-Simplified “range” information is sufficient
-Provides excellent real option value estimate
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Portfolio of Portfolios Concept
IdeaRepository
Recycle
BETTER BUSINESS
OPPORTUNITIES
Division PortfolioReview
Business UnitProject Management Process
SUBDIVISIONIDEA
PORTFOLIOS
Portfolio I Portfolio II Portfolio III
IDEATION
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Idea Portfolio Management at Boeing
Progressive structure to mature ideas to opportunities
Reliable results for coherent investment decisions
Best set of ideas that implement strategy feeding into stage gate project management process
Roll-up consistency across portfolios
Idea Phase Learning Phase Discovery Phase• Contextual
• Qualitative
• Business concept
• Range of performance
• Quasi-quantitative
• Risk & Opportunity Identification
• Quantitative
• Value & Investment
• Mitigation
FILTERING VALIDATION
IdeasProject
ManagementProcess
Stage Gate
Copyright © 2009 Boeing. All rights reserved.
Engineering, Operations & Technology | Boeing Research & Technology Business Engineering – Office of Chief Engineer
Summary
“Ideas to Innovation” taps the collective genius of Boeing
Focus on the most important growth challenges
Discipline at the front end of the business- Targeted idea generation- Strategy tailoring and refinement- Strategic portfolio management
- learning, risk identification, selection
More and better business opportunities feeding the stage gate project management process
A Role for Everyone in Innovation