Frank M' Hull Fordham University

1
SPOT Diagnostics
SPOT Diagnostics
ACE Knowledge
ACE Learning
Creating Value Creation Networks with Concurrent
Engineering
What to do
What to do
How to do it
How to do it

• Frank M. HullFordham University Strategy
  Research Institute
• Andrea Bifulco
• CE Consulting
• Marco Conte
• CE Consulting
• www.strategy-research-group.com
• December 1, 2003

2
Objectives

• Apply Benchmarking Diagnostics to Supply Webs
  focused on one or more OEMs
• Apply two proven concepts to the formation of
  VCNs-Value Creation Networks
• CE User GroupsCircles of large company
  participants that benchmark with one another
  regularly face-to-face and with SPOT diagnostics
• Entrepreneurs ForumA 2-stage review of business
  plans by a four groups
• Industrial practitioners
• Professors
• Government economic development staff
• Potential investors

3
Needs of SMEsA Lot Like Entrepreneurial Firms

Most Small Firms Need Partnerships with Large
Firms
4
4 Types of SystemStructure and PerformanceNote
SMEs lack scale economies, some lack technology

Tech
5
4 Types of SystemCoordination and Control Note
SMEs lack formal control, some are very
family-clan directed
Tech
6
The Network Challenge Using Multiple Bases of
Exchange

• Markets/Hierarchies
• Influence/Command
• Multiple customers
• Diversity of stakeholders
• Reliance on market and persuasion
• Multiple bases of exchange (X)
• Money
• Technology
• Market, Distribution
• Business process
• Prestige, credibility
• Common good
• You name it____________________________________
• Note Identifying X factors of exchange is key
  for building networks

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The Business Process ChallengeHigh performers
structure in advance of need
High
Business Process
Low
Size, Scale economies
Note SMEs strong in business process work better
with large partners
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SPOTS Acronym for Concurrent Program Management
1. Strategies are formulated, rapidly
implemented, and continually reiterated to ensure
customer needs are met in a timely and cost
effective basis

• A team uses a common process of development from
  the earliest stages of conception to the delivery
  of the finished program to customers

• People from different functions and departments
  are organized early-on as a team to
  simultaneously share responsibility for making
  decisions about program development within limits
  agreed upon with the sponsors of the OEMs

• The latest tools and technologies are used for
  program design, updating processes, and team
  communications

• Systems are integrated using mechanisms that
  bring people and resources together to create
  win/win solutions to common problems using
  multiple bases of exchange

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Best Practices Examples  STRATEGY Making
major changes to existing programs Making
rapid changes to existing programs PROCESS
Using structured processes for identifying
customer needs and translating into requirements
(QFD) Institutionalizing systematic
reviews for development projects ORGANIZATION
Using cross-functional teaming among
stakeholders Increasing the influence of
downstream functions in upstream decisions, e.g.,
customer service TOOLS Using common software
for project management Building on-line
databases with lessons learned and best practice
templates SYSTEM Involving customers early
in the service product development process,
pulling the product design in the direction
of customer needs Involving all functions
throughout the development and delivery process
with few hand-offs so that every works together
reciprocally --sharing responsibility for the
service product
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SPOT Perfection GapsPerfect 5
Minus Actual (Process Example)

• Legend symbol P1 refers to Processes,
  question 1, etc.
• Illustrative Interpretation
• Significant opportunities in market assessment
  processes
• High usage of design standards
• Uneven use of design reviews

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SPOT Best-in-Class Gaps Best Minus Your Score
This chart provides a comprehensive view of
product development improvement
opportunities. For example, Company Alpha is
doing relatively well in use of design
documentation, cross-functionality, and
development planning, but is significantly below
BIC in most other areas.
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SPOT Biggest Bang Gaps Gap x Impact of
Practice on Performance
Simulation Modeling pinpoints opportunities

• For example, Corp X has a large gap in
  Development Planning and this practice is
  strongly correlated with performance
• The big bang index is a quick starting point for
  prioritizing gaps for closure.
• But use a structured prioritization process to
  ensure appropriateness for your strategy and
  competitive position

Customer Focus
Formulation
System Agility
1.00
Planned Opportunism
System Integration
Clear Strategic Objectives
Product Development Controls
0.90
Core Business Competencies
Knowledge Capital
0.80
0.70
Core Technology Competencies
Voice of Supplier
0.60
Market Assessment
Voice of Customer
0.50

• Chart represents the extent of gap in benchmark
  X multiplied times strength of the correlation of
  the practice with performance.
• Biggest bangs for the buck
• -- Customer focus
• --Market assessment
• --Design reviews
• --External partnering
• --Collocation
• --Team rewards
• --Team boundaries
• --Market analysis
• --Process control
• --Analytical methods
• --Voice of customer

0.40
Requirements Management
Electronic Data Interchange
0.30
Cross-functionality
Computer Auto.Prod. / Delivery
0.20
0.10
Development Planning
Flexible Production/ Delivery
0.00
Design Standards
Analytical Methods
Documentation
Process Control
Product Reviews
Development
Continuous Improvement
Market Analysis
External Partnering
Process Coaching
Project Orientation
Team Boundaries
Cross Functional Teaming
Team Rewards
Life Cycle Responsibility
Organic Structure
Co-Location
Ambidexterity
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ACE House of CE Learning Mentors of Best
Practices (Strategy Example)
Mentoring Opportunity
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ACE Deployment Manuals
Spreadsheets enable stakeholders to prioritize
actions for closing gaps.
5 Structured Steps 1.         Prioritize gaps for
closure using ratings provided by SPOT and your
stakeholders 2.         Brainstorm for causes of
gaps 3.         Affinitize causes of gaps and
restate as positive actions 4.         Select
actions to close gaps 5.         Summarize
actionable practices and assign change coach
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Strategizing for the ChallengeRapid, Reiterative
Decisions

• Float provisional program objectives to
  stakeholders
• Engage stakeholders early-on in a process of
  rapid decision-making
• Execute a trial step of the program and
  reevaluate
• Broaden the scope of the program
• Revaluate again
• Continue to execute the program with appropriate
  modifications
• Note Analogous to Demings cycles of Plan, do,
  check, act

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Processes for the ChallengeCommon Program
Management Processes

• Publicize a standard process for cross-functional
  stakeholders to suggest ideas for the program
• Use a standard process for evaluating ideas that
  includes rapid feedback
• Deploy structured processes of decision-making to
  gain early, rapid consensus on decisions
• Implement the program using a phase-gate process
  with milestones that are reviewed by stakeholders
  at pre-specified points in time
• Use process mapping methods to build a vision of
  should be versus is states
• Execute program processes in sync with the
  strategy process of rapid, reiterative
  decision-making above
• Note Program processes are similar to those used
  from product development and/or project management

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Organizing for the Challenge Early Simultaneous
and Continuous Involvement

• Involve diverse stakeholders in the program
  development process from the outset
• Include the voice of those sometimes involved
  late in executing program plans, such as
  technical resource specialists and customers
• Maintain appropriate levels of involvement by
  multiple stakeholders throughout the deployment
  process
• Empower the stakeholders as a cross-functional
  group with life cycle responsibility for the
  program
• Ensure the cross-functional group of stakeholders
  execute their responsibilities using structure
  processes, e.g., reviews at specified stage-gates
• Note Organizing networks differs from
  hierarchical organizations because of a lack of
  command and control. This makes influence and
  market exchanges relatively more important.

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Tools for the ChallengeEnabling processes,
organization, any systems integration

• Deploy a web site that publicizes not only the
  strategic objectives of the RDCs, but also
  enables stakeholders to have input into the
  process of reformulating strategy
• Deploy the program development process on the web
  with templates for customization
• Deploy communications protocols enabling all
  stakeholders to have continuous input to
  decisions
• Make available and train stakeholders in using
  decision-support tools, e.g., trade-off analyses,
  life-cycle modeling
• Map key system interfaces over the course of the
  program life cycle and build appropriate
  connectivity from the outset
• Note Tools and technologies are enablers, people
  are the drivers!

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Systems for the ChallengeValue-chain Integration

• Continuously map the process of program execution
  to ensure that inputs add value to objectives.
• Focus on nodes where multiple inputs are
  integrated
• Remove barriers to stakeholder integration
• Continually brainstorm for diverse stakeholders
  to achieve bases of exchange
• Note Money is is the single most important basis
  of exchange, but it accounts for less than an
  aggregation of other factors.

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Limitations of SPOTSModel Applies best to Large,
High-tech Systems

• SMEs lack economies of scale and some lack
  technology
• OEMs can help broker complementary exchanges
  among 4 types of system illustrated below
• Identify multiple factors of exchange (X)
• The Scale economies of larger firms and their
  more formal systems of coordination and control
  are key resources
• The technological capabilities of small,
  high-tech firms is a key resource ripe for
  partnership with large, high-tech firms (e.g.,
  partnerships across the top two quadrants in the
  next slides)

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OEM LeadershipCE User Group of Leading
Suppliers

• OEM identifies 8-10 of the leading SMEs in the
  region
• OEM assesses the knowledge skills of each SME
• OEM forms a club of SMEs with strengths for
  sharing
• SMEs take turns hosting others
• Here is how we operate
• What we think we do best
• What do you think we can we do better?
• OEM imports subject matter experts to close gaps
• Session at end attempts to cascade learning to
  others

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Supply Network User Group
OEMs select key supply-chains in collaboration
with one of more OEMs. Networking is used to
help 1st and 2nd Tier suppliers work more
collaboratively Option Broadcast procurement
plans and procedures of the OEMs Examples
Airbus, Chrysler, Hewlett-Packard
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EPI-Early Partnership InvolvementComposite
Framework of CE Effectiveness
F-11-Market challenge (MKT)
Performance
C6-Strategy (RRR)
A-6. Planned (PLA)
B-6. Emergent (EME)
E- 10. New Product Task (New)
EPI