Common Themes / Leading Practices · Knowledge Management • Explicit & tacit knowledge is viewed...

Common Themes / Leading Practices

APQC and AME Membersand the

Benchmarking Community of Practice

2009The information in this document is the property of The Boeing Company and may not be copied or communicated to a third party, or used for any purpose other than that for which it is supplied without the express written consent of The Boeing Company.

William Sacherek425 931-6734

[email protected]

COPYRIGHT © 2009 THE BOEING COMPANY

Strategic Benchmarking

•Strategic thinking, evaluation and implementation of leading practices allow the company to leverage those practices which yield benefits across multiple business segments and functions of a company.

•The more these practices are integrated and bundled together as leading practices/common themes the more enabled a company is to perform with a competitive advantage.


Strategic Thinking yields Strategic Practices

• In efforts to focus on continuous improvement functions, business units, and product teams often sub-optimize to the detriment of the company.

•To prevent unintended or undesirable consequences it is necessary to consider the following:

•Strategic intent of the business•Maturity of the business sector•Lifecycle of the products and services•Talent, skills, knowledge and experience for sustainability• Inclusion of all functions for quality decision making•Understanding managing vs mitigating risk


Appreciating Multiple Perspectives

Following is a partial list of a partial Common Themes/Leading Practices discovered over many years, across many industries and normalized which should provide a solid framework for you toapproach efforts at both incremental and breakthrough gains ofa strategic nature.

From each functional perspective consider the following:

Value to Customer (Need not Want)RevenueProfit marginCash FlowCompetitive Talent Advantage (Sustainability)Flexibility to Re-invent Business Proposition (Culture)



•Flat Management Structure

•Top Down Strategy

•Risk Aligned with Corporate Strategy

•Attract, Retain and Develop Talent

•Metrics Linked to Business Plan

•Training & Education Linked to Business Strategy

•Business Information Shared with Workforce

•Target Costing/Design to Cost

•Partners & Suppliers



• Market & Business Strategies Drive New Technology Development

• New Product Development Uses Proven Technology

• CTO/Technology Board has Oversight of Corporate Technology Strategy

• Requirements Definition

• Modularity & Commonality Reduce Cost, Risk & Time to Market

• Enforced Re-Use Plan and Policy

• Knowledge Management

• Increased Collaboration with Industry, Academia and Government


Flat Management Structure

•A flat management structure is predicated upon stable and robustprocesses and practices.

•A “zero tolerance” approach is applied to unnecessary activities.

•Decision authority is forced to the lowest feasible level.

•The amount, clarity, and speed of communication is increased in both directions.

•The “buffer” to change is reduced.

•Four levels of management are most common.


Top Down Strategy

•Strategy must be defined at the highest level of the company.

•All corporate activities must be aligned with strategy.

•Appropriate level of management has the accountability & authority for implementing the strategy.

•Management at all levels must be consistent in defining, executing, and communicating the plan.

•Accountability to the plan must be enforced.

•All levels understand how their activities map to the corporate strategy.


Risk Aligned with Corporate Strategy

•Appropriate level of risk is defined to execute the strategic plan.

•Allocate the resources necessary to support the strategic plan.

•All technical risks are carefully planned to ensure technical advances or learning even if the project fails.


Attract, Retain and Develop Talent

•Leaders must be able to create the culture/environment to attract, retain and develop talent.

•The Value Proposition must clearly define the company offer and the expectation of the employee.

•The new role for HR is to underwrite the initial value proposition, provide flexibility for “critical talent”, and enable managers to hire better people faster.

•“They will leave: It’s just Who and When?” “People often quit emotionally, then intellectually, before they quit physically.”

•Free agents will become increasingly more common in the “top talent market.”


Metrics Linked to Business Plan

•Desired behaviors must define metrics or metrics will define behavior.

•Desired behaviors must be simple, clear, easily carried out, andrewarded.

• Incentives must be established to drive performance to metrics.

•Metrics are linked to desired performance by policy.

•Many companies use “balanced scorecards”. Everyone regardless of function shares a common set of evaluation criteria and goals.

•Measure what the end customer values (vital few). Focus on what you do not do well.


Training Linked to Business Strategy

•Successful teams require a stable workforce and extensive training.

•Job rotations enable employees to work in other functional areas to broaden business perspective.

•Companies train and reward employees to be multi-skilled.

•Fewer job classifications are required due to multi-skilled training.

•Employees are provided with at least one week of on-the-job skills-based training each year.

•Corporate expectations are clearly defined and people are held accountable to complete the training.


Business Information Shared with Workforce

•Global business and industry sector trends are shared regularly with the workforce.

•The benefits of a knowledgeable, business competent workforce outweighs the risk of competitive leaks.

•Cost data must be available to the workforce before the workforce can meet cost goals.

•Costs are available on-line to employees.


Target Costing/Design to Cost

• (Price market is willing to pay) less (desired margin) = (target cost)

• Integrated Product Teams (IPTs), Lifecycle Product Teams ( LCPTs) must design parts which meet cost / performance targets.

•Teams need estimating tools to understand and control all costs associated with the design, manufacture and ownership of the product through its entire life.

•Manufacturing and supplier cost inputs are essential to achieving design to cost targets.


Partners & Suppliers

•Shared vision is a jointly-held, mutually beneficial view of the business opportunity.

•Partner suppliers are responsible for detail design, build, test/certify, and integration of components.

•Key long term suppliers are willing to share costs and risks on product innovation.

•Timely and increased supplier involvement is required.

•There is no single agreed upon way to have a partnership that ensures “mutually assured profitability”, i.e., shareholder value.


Market & Business Strategies Drive New Technology Development

•Long-term technology strategy is defined at corporate level.

•R&D resource allocation is driven by corporate market strategy.

• Innovation occurs only when it adds internal value or adds value for which the customer is willing to pay.

•R&D activities must be supported by a robust business case process which is consistent across the corporation.

•Multi-disciplinary reviews of technology are performed regularly.

•Non-performing development programs are terminated quickly.


New Product Development Uses Proven Technology

•New technology has to be demonstrated effective before program launch.

•Critical path includes only proven technologies.

•Using only proven technologies reduces critical path testing requirements.


CTO/Technology Board has Oversight of Corporate Technology Strategy

•CTO defines, owns and enforces the technology vision and technology strategy.

•Process ensures there is no duplication of product or technologydevelopment.

•Process ensures technology is shared across the corporation.

•Technology is developed, co-developed, or acquired based on core competency considerations.

•Long-term technology strategy is shared internally and further developed with key suppliers.


Requirements Definition

•Two timing approaches are commonly used:

• Early and firm definition of requirements is essential to meet aggressive cost and schedule targets.

• Firm requirements released on a “just in time” basis. Marketing and strategy inputs must converge prior to (not during) firm productdefinition.

•Marketing and Sales are held accountable for late customer change requirements.

•Define correct level of specifications (over or under specifying drives costs).


Modularity & Commonality Reduce Cost, Risk & Time to Market

•Creative skills must be refocused from new part creation to commonality and business case considerations (cultural change).

•Modular packages allow customer customization and optimization with minimal cost.

•Easy identification of existing parts is essential for part re-use.


Enforced Re-use Plan and Policy

•Re-use programs for parts, processes and tools must be formal and rigorous.

•Allows better decision making of selection of re-use.

•Designers must submit exceptions to steering committees.

•Project funding approval is influenced by degree of re-use.

•Easy identification of existing parts and cost is essential for re-use. Web based data banks are integrated with CAD and information systems.


Knowledge Management

•Explicit & tacit knowledge is viewed as an asset. Effective knowledge management facilitates retention & reuse.

•Committed leadership is needed to ensure that knowledge is shared, learned, applied and retained. Metrics re-enforce this activity.

•Systematic management of knowledge is an essential capability for thriving in a rapidly changing business environment.

•Both functional & cross-functional development & sharing of knowledge are required.


Increased Collaboration with Industry, Academia and Government

•Spreads risk/cost.

• Increases available talent pool/expertise.

•Aligns industry, government and academia to the corporation’s strategy.

•Accelerates development and acceptance in the marketplace.


Leadership must enable the workforce to implement these idea

•“If a sufficient number of management layers are superimposed on top of each other, it can be assured that disaster is not left to chance.”Norman R. Augustine, former CEO Lockheed-Martin

•Participation is not an option.


Contact Information

•Questions ?

•[email protected]•425 931-6734


Comparing Company X and Company Y•Company X Practice:

•Assertion:

•Assumption (s):

•Company Y Practice

•Assertion:

•Assumption (s)


“Best P ractices”– Valid, Relevantand Current !

•Leading Practitioner

•Leading Aerospace Practitioner

•Leading Boeing Division/Unit/Program

•Engagement Plan for Sharing, Replicating and Improving

Owner:


Benchmarking Industry Segments

•Aerospace•Automotive•Light and Heavy Rail•Commercial & Military Shipbuilding• Industrial Machinery and Equipment•Oil and Gas Exploration, Processing and Services•Electronics and Consumer Goods•Retail Trade•Natural Resources – Mining and Manufacturing•Medical, Pharma and Bio Tech•Entertainment, Communications and Software•Federal Agencies, Non-Profits, Universities and NGOs

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