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Roadmapping and Portfolio Management - Almojuela and Bekker 2004

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Presentation on the relationship between Strategic Roadmapping and Portfolio Management

Presentation on the relationship between Strategic Roadmapping and Portfolio Management

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  • Here’s a little background information that will serve as a backdrop for our discussion.
    Although Boeing is best known as a technology company, Boeing Commercial Airplanes is probably best thought of as a heavy manufacturing organization.
    Our main focus, therefore, is a smoothly operating production line. We spend a lot of time worrying about that airplane that is supposed to deliver to an airline customer next week, and we’re good at that.
    That sometimes makes it hard to force ourselves to look out 10 or 20 years – but strategic roadmapping and portfolio management help us do that.
  • PM Decision Model includes multiple steps. To form the portfolio of technology, product, feature or any other projects we need to start with the Master Project List. First step on our way to forming the portfolio is to understand if projects are aligned with BCA Business Goals. If so, we can use different filters, which represent factors candidate projects can be scored against. Filters facilitate value maximization of the portfolio. To ensure that our portfolio is balanced we use lenses – metrics that help us assess our portfolio in 2-dimensional and even 3-dimensional models. There are several processes that help perform the project and portfolio assessments and make decisions.
  • Darwinian theory of portfolio management can be viewed as “survival of the fittest”. Gate process represent Go/No Go decision points embedded into the product development model. Gate decisions occur in real time as the project moves from one development stage to the next one. Each project is measured against the certain set of criteria at each gate review. The consistent process and criteria set help timely eliminate “weak” projects – those that are not aligned with the corporate or product strategy, not technically feasible, too risky to continue with, too costly, etc. It helps optimize budget and resource allocation by focusing on “the fittest” projects. Technology gated process is represented by technology readiness process. The alignment between two gated processes is essential to ensure delivery of a new product with the most advanced technologies
  • Darwinian theory of portfolio management can be viewed as “survival of the fittest”. Gate process represent Go/No Go decision points embedded into the product development model. Gate decisions occur in real time as the project moves from one development stage to the next one. Each project is measured against the certain set of criteria at each gate review. The consistent process and criteria set help timely eliminate “weak” projects – those that are not aligned with the corporate or product strategy, not technically feasible, too risky to continue with, too costly, etc. It helps optimize budget and resource allocation by focusing on “the fittest” projects. Technology gated process is represented by technology readiness process. The alignment between two gated processes is essential to ensure delivery of a new product with the most advanced technologies
  • Darwinian theory of portfolio management can be viewed as “survival of the fittest”. Gate process represent Go/No Go decision points embedded into the product development model. Gate decisions occur in real time as the project moves from one development stage to the next one. Each project is measured against the certain set of criteria at each gate review. The consistent process and criteria set help timely eliminate “weak” projects – those that are not aligned with the corporate or product strategy, not technically feasible, too risky to continue with, too costly, etc. It helps optimize budget and resource allocation by focusing on “the fittest” projects. Technology gated process is represented by technology readiness process. The alignment between two gated processes is essential to ensure delivery of a new product with the most advanced technologies
  • Darwinian theory of portfolio management can be viewed as “survival of the fittest”. Gate process represent Go/No Go decision points embedded into the product development model. Gate decisions occur in real time as the project moves from one development stage to the next one. Each project is measured against the certain set of criteria at each gate review. The consistent process and criteria set help timely eliminate “weak” projects – those that are not aligned with the corporate or product strategy, not technically feasible, too risky to continue with, too costly, etc. It helps optimize budget and resource allocation by focusing on “the fittest” projects. Technology gated process is represented by technology readiness process. The alignment between two gated processes is essential to ensure delivery of a new product with the most advanced technologies
  • Transcript

    • 1. Boeing Commercial Airplanes Roadmapping and Portfolio Management Keys to a Robust Strategic Planning Process Ben Almojuela Associate Technical Fellow Product Development Olga Bekker Technical & Technology Integration - 7E7 Program Getting 10X Value Alignent Roadmapping Conference Washington, DC December 16-17, 2004
    • 2. Introduction
    • 3. Boeing Commercial Airplanes • Heavy manufacturing • Large, expensive, complex, technologically intensive, highly integrated products • Highly cyclical market • Low-margin customers • Highly regulated
    • 4. Strategic Planning Goal & Objective Setting • Strategy implementation • High-level tactics Strategic Decision Process • Decision-making philosophies • Preplanned responses Portfolio Management • Capabilities • Potential Options for action • Ongoing Development • Resource Allocation Roadmapping • Situational representation over time • Representation of strengths, weaknesses opportunities, threats • Context for planning (“what ifs”) Intelligence • Gathering & processing of incoming information • Information test & validation • Fill information gaps • Research • Trends
    • 5. Basics of Strategic Roadmapping
    • 6. 2006 2007 2008 2009 2010 2011 20122005 2013 2014 2015 2016 2017 201820042003 20202019 2021 2022 2023CATEGORY WORLD BUSINESS ENVIRONMENT ECONOMIC ENVIRONMENT WORLD INFRASTRUCT GOVERNMENT/ REGULATORY INTERNAL BUSINESS ENVIRONMENT CONSUMER ATTITUDES COMPETITION Market Roadmap Example Internal & External Influences
    • 7. Strategic Roadmapping • Grasp the uncertainties of the long-term future in a systematic and methodical manner • Develop planned responses to evolving regulatory changes, market needs, customer requirements, and competitor/adversary threats • Understand and dynamically align our technology development plans, product development efforts, market needs, and high-level company strategies as they evolve and change over time • Support production of living, long-term integrated plans for products and technology development
    • 8. Strategic Roadmapping Goals • Dynamic alignment and integration of all of the elements essential for long-term organizational success – Business strategy – Market/Environment – Product – Process – Technology – Resources and Capabilities • Near real-time, continuous strategic collaboration and communication between stakeholders • Identification of potential challenges, uncertainties, disruptions, synergies, and gaps over the long-term
    • 9. Basics of Portfolio Management
    • 10. Portfolio Management • A dynamic decision process, in which – A set of active new product & R&D projects is regularly evaluated, prioritized, and selected based on the goal of obtaining the greatest possible value from the organizations limited resources Project Selection Project Evaluation Project Prioritization Strategizing Resource Allocation across projects Corporate Resource Allocation PORTFOLIO MANAGEMENT FOR NEW PRODUCTS
    • 11. 1.----------- 2.---------- 3.---------- 4.---------- 5.---------- 6.---------- 7.---------- 8.---------- Portfolio Management Goals • Value Maximization – Allocate resources so as to maximize the value of the portfolio in terms of some company objective • Balance – Desired balance of projects in terms of a number of parameters • Strategic Alignment – Consistency with business strategy 1 B2 3 4 Ideas Launch Aligned with strategy Reward (NPV) High Low Risk
    • 12. World Market Latent Customer Needs 767 757 BCA Enterprise Preferred Airplane Family Forever! Purpose: To shape a coherent direction in BCA’s innovation around its Products and Technologies, driven by the market. Approach: Reliable methods for managing innovation to produce value. Methods emphasize systems thinking, PD/AT Discovering Deciding Deploying Developing 1. Define Integrated Strategies, Needs and Opportunities2. Shape the Innovation Portfolio 4. Deploy the Value 3. Develop the Needed Capabilities 737 747 777 7E77E7 717 Commercial Aviation Services Needs Strategies Ready Capabilities Market& Differentiation Guidance Boeing Commercial Airplanes Product & Technology Development Process
    • 13. Roadmapping & Portfolio Management - Strategic Synergies
    • 14. Roadmapping and Portfolio Management Synergy Timing Resources Mid-term, Long-term Relatively short-term Communication Decisions Scenarios (Solutions) Projects Needs Plans Disrupt Sustain Environment Risk Battlefield Map Battle Plan Phases/Stages Phases/Stages Allocation Buckets Allocation Buckets StrategyStrategy ConsensusConsensus CriteriaCriteria AttributesAttributesDefinitionDefinition DatasetDataset RM Toolset PM Toolset ImprovementsImprovementsAdvancesAdvances InfluencesInfluences BattleBattle StrategyStrategy Relational Relational databases databases Hierarchical Hierarchicalapproach approach
    • 15. Portfolio Management Decision Model Filters (Prioritize & Sort) Lenses (Balance) Safety Program Enabler Airplane Regulatory Environmental Regulatory Product Differentiators Master Project List (Existing and Proposed) Portfolio (Technology, Product, R&D, etc.) Refresh Cost vs. Benefit Risk vs. Benefit Performance to Plan Integrated Strategy Gatedprocess(gatecriteriachecklist) Portfolio&StrategyReview(QFD) TechnologyReadinessAssessments RiskManagement&SensitivityAnalysis TO PROGRAM •Solutions Parking Lot Roadmapping Budget & Resource Limitations Strategic decisions Deal with uncertainties
    • 16. Alignment with Strategic HorizonsNearTermImmediate Term LongTerm Yearstodelivery 0 2 4 6 8 Project 3 Healthy Core Business Expand Project 8 The goal of the 3 horizons approach is to develop businesses in parallel, Regardless of their stage of maturity Project 1 Project 4 Project 10 Project 5 Project 2 Project 11 Project 7 Project 6 Project 9 New Frontiers - Size of the bubble indicates resources - Dashed line indicates that the project has not started, yet - Color of the bubble is an indication of the certain cost range
    • 17. Roadmapping, Portfolio Management & Strategy Planning • Roadmapping is a strategic process that “feeds” and being “fed” by further tactical decisions in portfolio management • Portfolio Management ensures strategic alignment process by establishing intimate connection between strategy and resource allocation • “Strategic mapping” should be applied throughout all product and technology development cycles • Both Roadmapping and Portfolio Management processes should be focused on Business, Product, and Technology strategy alignment • Both Roadmapping and Portfolio Management should provide stimulation for business and product strategy validation
    • 18. Roadmapping & Portfolio Management - “Working Together” Synergies
    • 19. Roadmapping and Portfolio Management Synergy Timing Resources Mid-term, Long-term Relatively short-term Communication Decisions Scenarios (Solutions) Projects Needs Plans Disrupt Sustain Environment Risk Battlefield Map Battle Plan Phases/Stages Phases/Stages Allocation Buckets Allocation Buckets StrategyStrategy ConsensusConsensus CriteriaCriteria AttributesAttributesDefinitionDefinition DatasetDataset RM Toolset PM Toolset ImprovementsImprovementsAdvancesAdvances InfluencesInfluences BattleBattle StrategyStrategy Relational Relational databases databases Hierarchical Hierarchicalapproach approach
    • 20. Portfolio Influences • Both Roadmapping & Portfolio Management operate within similar environment • The depth of analysis in each category is different in both macro-processes and predetermined by the end goal • Risk explicitly evaluated at each stage of the PM gated process and assessed within portfolio environment • Strategic risks can be revealed by aligning market, product and technology on a roadmap
    • 21. Roadmapping and Portfolio Management Synergy Timing Resources Mid-term, Long-term Relatively short-term Communication Decisions Scenarios (Solutions) Projects Needs Plans Disrupt Sustain Environment Risk Battlefield Map Battle Plan Phases/Stages Phases/Stages Allocation Buckets Allocation Buckets StrategyStrategy ConsensusConsensus CriteriaCriteria AttributesAttributesDefinitionDefinition DatasetDataset RM Toolset PM Toolset ImprovementsImprovementsAdvancesAdvances InfluencesInfluences BattleBattle StrategyStrategy Relational Relational databases databases Hierarchical Hierarchicalapproach approach
    • 22. Technology & Product Advances & Improvements Integrated Process: • Disciplined Milestone Definition and Reviews • Includes entire Product Life Cycle • Aligns Technology and Product Development • Ensures that Technology Development is strategy and product driven • Ensures that Technology is developed to expected level of maturity prior to Program Need • Allows for continuous improvement of products and processes and incorporation of lessons- learned 1 PHASE 1 Define Product & Program PHASE 2 Execute Program PHASE 3 Produce, Support & Improve Product Gate 1 Gate 2 Gate 3 Gate 5 Gate 6 Gate 7 81 2 3 4 6 7 ! Idea Continuous Product Improvement 5 Gate 4 Feasibility Practicality 21Discovery PHASE 0 Basic Research & Technology Development ! Idea Initiate Research Initiate Development Demonstrate Feasibility Readiness Gate 2 Readiness Gate 1 Discovering Deciding Deploying Developing Discovering Deciding Deploying Developing
    • 23. Roadmapping & Portfolio Management - Comparative Attributes
    • 24. Comparative Attributes of Roadmapping and Portfolio Management Attribute Roadmapping Portfolio Management Timing Describes critical timing constraints (too early, too late). Ensures that products and technology are delivered to market at the “target” time. Projects Generally does not define potential projects. Defines potential environments that projects influence or respond to. Focuses on needs and solutions rather than projects. Defines projects or sets of projects to address scenarios on the roadmaps in accordance with strategic concepts. Focused on projects and project attributes that affect portfolio management outcomes. Resources (personnel, finance, technical, etc) Resources addressed only qualitatively. However, may identify gross resource constraints. Aligns resources, work statement, and resultant risk levels. Resource allocation is a major goal.
    • 25. Comparative Attributes of Roadmapping and Portfolio Management Attribute Roadmapping Portfolio Management Planning Influences high-level planning, but is not key driver. Creates a framework for further planning efforts. Critical to long-range planning and execution of plans. Creates a framework and helps collect data for further planning activities. Decisions Defines potential environments for scenarios that are used in decision process (“battlefield map”), but not a decision-making tool. Makes tactical (execution of strategy) decisions. Strongly influences strategic decisions. Decision-making systems embedded in process. Communication and Collaboration Excellent platform for cross- stakeholder communication and collaboration. Lends itself to development of “common language”. Imposes a common nomenclature for stakeholders to support critical decision making. Facilitates structured discussions and dialogues. Disruption (completely new and unexpected market value) Disruptions reflected as new scenarios. Handles disruption with difficulty. Special sub-processes required to handle disruptive opportunities and threats.
    • 26. Comparative Attributes of Roadmapping and Portfolio Management Attribute Roadmapping Portfolio Management Synergy Synergies are evident by including additional information in the roadmap network. Promotes interaction with any “adjacent” process (e.g. portfolio & project management, strategy planning, product & technology development, marketing analysis) Synergies may be reflected at a high level but may be difficult to align at lower levels. Critical macro-process for bringing ideas all the way to the market. Strong synergy with project management and technology planning. Strategy Reflects strategy in the roadmap alignment and validates strategy. Reflects strategy in decision making. Uses strategy-related criteria to facilitate decision-making and aligning product & technology development with corporate & product strategy. Risk Risk reflected only in alignment structure of market-product-technology-etc. Can help define strategic risks. Addresses risk in terms of multiple scenarios for project developments. Risk explicitly evaluated at each stage of gated process within portfolio environment.
    • 27. Comparative Attributes of Roadmapping and Portfolio Management Attribute Roadmapping Portfolio Management Alignment Aligns critical developments in time. May have multiple scenarios. Aligns executive level of decision-making to the operational level. Aligns work statement, resources for each project or set of projects within portfolio. Aligns development with decision-making process. Tools to support Varies from simple Powerpoint charts to specialized Roadmapping software (GVS) Tools for effective portfolio management: • Relational databases • Tools based on scoring models, from QFD to other software. Scoring models and checklists best represent benefit measurement techniques. • Probabilistic financial models • Behavioral approach (Delphi methods and others) • Advanced techniques: mathematical optimization procedures and PASS (Project Analysis and Support System)
    • 28. Roles of Roadmapping and Portfolio Management in Strategic Analysis Attribute Roadmapping Portfolio Management Strengths Can identify timing that will cause competitors most heartburn for least effort (“bang for the buck”) Aligns projects to take advantage of greatest competitive strengths Weaknesses Can identify long-term strategic weaknesses before they become critical Can re-align plan and resources to minimize weakness and risk Opportunities Opportunities may be reflected as additional scenarios, possibly with different risk levels. Fixed risk levels tend to determine what opportunities are pursued. Flexible risk levels allow nimbleness but are complex. Opportunities from cost, schedule, technical and planning standpoints may be included. Threats Effects of potential threats can be laid out on roadmap and effects of high-level responses evaluated Alternative approaches to threat response can be evaluated and response strategies developed. Can identify and monitor “least risk” responses.
    • 29. Conclusion
    • 30. Strategic Planning Goal & Objective Setting • Strategy implementation • High-level tactics Strategic Decision Process • Decision-making philosophies • Preplanned responses Portfolio Management • Capabilities • Potential Options for action • Ongoing Development • Resource Allocation Roadmapping • Situational representation over time • Representation of strengths, weaknesses opportunities, threats • Context for planning (“what ifs”) Intelligence • Gathering & processing of incoming information • Information test & validation • Fill information gaps • Research • Trends
    • 31. One day Alice came to a fork in the road and saw a Cheshire cat in a tree. “Which road do I take?” she asked. “Where do you want to go?” was his response. “I don't know,” Alice answered. “Then,” said the cat, “it doesn't matter.” -- Lewis Carroll “Alice in Wonderland” Making Good Decisions
    • 32. Recommended Reading Books • Portfolio Management for New Products, Robert G. Cooper, et al, Perseus Books, 1998 • Project Portfolio Management - Selecting and Prioritizing Projects for Competitive Advantage, D.D. Lowell and J.S. Pennypacker, 1999, published by Center for Business Practices Papers • “Doing It Right: Winning with New Products”, Robert G. Cooper, Ivey Business Journal, July/August 2000. http://www.prod-dev.com/pdf/Working_Paper_10.pdf • “Portfolio Management for New Products: Picking the Winners”, Robert G. Cooper and Scott Edgett, Product Development Institute, 2001. http://www.prod- dev.com/pdf/Working_Paper_11.pdf • “New Problems, New Solutions: Making Portfolio Management More Effective”, Robert G. Cooper, Scott J. Edgett, and Elko J. Kleinschmidt, Research Technology Management, 2000. http://www.prod-dev.com/pdf/Working_Paper_9.pdf • “Portfolio Management – Fundamental to New Product Success”, Robert G. Cooper, Scott J. Edgett, and Elko J. Kleinschmidt, Product Development Institute, July 2001. http://www.prod-dev.com/pdf/Working_Paper_12.pdf • A Practical Approach to Portfolio Management, Kenneth Crow, DRM Associates, http://www.npd-solutions.com/portfolio.html

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